Taxability of Salaries of U.S. Missionaries on Account of Services Performed in the Philippines

February 24, 1967 BIR RULING NO. 012-67 Rev. Byron W. Clark World Division of the Board of Missions of the Methodist Church 900 United Nations Avenue M a n i l a S i r : This refers to your letter dated January 31, 1967 requesting information as to whether or not the balance of the salaries of your missionaries left in the United States may be reported for income tax purposes in the Philippines at the rate of P2.00, and as to whether or not the salaries of missionaries received or to be received while on leave for four or twelve months in the United States will be reported in their income tax returns. In reply, please be inform that, pursuant to Executive Order No. 68, dated November 6, 1965, the parity value of the peso was modified from US $0.50 to US $0.2564103. In effect the official parity of the Philippine peso to the U.S. dollar became P3.90 to $1.00, effective November 8, 1965. Accordingly, the total amount of the salaries or emoluments received by your missionaries on account of services performed in the Philippines, including that portion retained in the United States being income derived from sources within the Philippines should be reported in their income tax returns at the rate of P3.90 to $1.00. Vacation and sick leaves are privileges arising out of employment. Therefore, salaries or emoluments during such leaves of absences are considered earned by reason of employment. Such being the case and considering the fact that such salaries and privileges are enjoyed by reason of the performance of services rendered in the Philippines, salaries or emoluments received during their leaves of absences form part of their income derived from sources within the Philippines and, therefore, subject to Philippine income tax. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue