Samson & Associates Law Office

December 22, 2009 BIR RULING [DA-(I-40) 809-09] 24 (A); BIR Ruling 012-89 Samson & Associates Law Office 33 Rizal Avenue, San Carlos City Pangasinan Attention: Atty. Joseph A. Samson Gentlemen : This refers to your letter dated December 7, 2009 requesting for a ruling that your client may be classified as resident alien for tax purposes for taxable year 2007. It is represented that that your client, Mr. Steinar Kristensen, is a Norwegian citizen; that he came to the Philippines in February 2007; that he applied for and was admitted to the Philippine Retirement Program of the Philippine Retirement Authority; that on June 13, 2007, he obtained a Special Retiree Residents Visa; that he has been staying in Makati from 2007 up to the present as evidenced by his Contracts of Lease for the years 2007 and 2008; and that he paid his taxes for the years 2007 and 2008 in the Philippines as a resident alien. Based on the foregoing representations, you now request, in effect, for a ruling that your said client should be properly classified as a resident alien and, as such, should be liable for Philippine income tax under Sec. 24 (A) of the 1997 Tax Code, as amended. In reply, please be informed that one of the basic objectives of Executive Order No. 1037 in creating and establishing the Philippine Retirement Authority is the development and promotion of the Philippines as a retirement haven for foreign nationals. As a consequence of obtaining the Special Retiree Residents Visa as a result of his admission to the Philippine Retirement Program, Mr. Kristensen's status for Philippine tax purposes was converted to that of a resident alien subject to Philippine income tax under Section 24 (A) of the 1997 Tax Code, as amended. Accordingly, your said client is liable to pay Philippine income tax on his taxable compensation, business and other income as defined in Section 32 of the Tax Code. (BIR Ruling 12-89 dated February 3, 1989) aEACcS However, social security benefits, retirement, gratuities, pensions and other similar benefits received by resident or non-resident citizen of the Philippines or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, private or public are not subject to income tax. (Sec. 32 (b) (6) (c) Tax Code, as amended) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service