Taxability of Philippine Inheritance Tax of a Nonresident Foreign Legatee

June 22, 1967 BIR RULING NO. 025-67 The Philippine National Red Cross National Headquarters 860 United Nations Avenue M a n i l a Attention : T . Calasanz Secretary General Gentlemen : This refers to your letter dated May 4, 1967 requesting legal opinion on a query stated as follows: cd "If a bequest was being made by a resident of the Philippine Islands to, say, the American Red Cross, would the American Red Cross have to pay any death or inheritance taxes on this bequest? If the answer is NO, then under the California Law, the Philippine National Red Cross would not have to say an inheritance tax, for the inheritance code of the State of California provides, in substance, that if a bequest is made to a foreign charitable organization, the question of whether or not this organization would be exempt as a charitable bequest under the laws of the State of California would depend on what the Phil. Government would do under its Internal Revenue Laws to a bequest by a Philippine resident to a legatee whose domicile was California." In reply thereto, I have the honor to inform you that under Section 86 of the National Internal Revenue Code, a nonresident foreign legatee like the American Red Cross is subject to the Philippine inheritance tax as class "A" heir on a bequest in cash made in its favor by a resident of the Philippines. However, Section 122 of the same Code grants nonresidents exemption from inheritance tax on the intangible personal property found in the Philippines under the following conditions; 1) that the decedent at the time of his death was a resident of a foreign country; and 2) that the laws of the said foreign country allow a similar exemption from transfer taxes or death taxes in respect of intangible property owned by citizens of the Philippines not residing in that foreign country. Moreover, in order that the reciprocity provisions will apply, reciprocity must have to be total, not merely partial. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue