Request for Tax Exemption under the Provisions of Article V, Sec. 18(b) of the Convention on the Privileges and Immunities of the United Nations Organization

February 25, 1991 BIR RULING NO. 031-91 21 (a) (2) 24 51-80 031-91 Gentlemen : This refers to your letter dated September 4, 1990 requesting tax exemption, and for your personnel under the provisions of Article V, Sec. 18(b) of the Convention on the Privileges and Immunities of the United Nations Organization. It is represented that the Refugee Services Philippines, Inc., is a non-stock, non-profit organization registered with the Securities and Exchange Commission (SEC); that it implements projects of the United Nations High Commissioner for Refugees (UNHCR) for non-Indo-Chinese refugees and asylum seekers in the Philippines; that it has taken over the functions of the Refugees Assistance Foundation (RAF) whose contract with UNHCR has been terminated as of June 30, 1990. In reply, please be informed that pertinent provisions of the Convention on the Privileges and Immunities of the United Nations, adopted by the General Assembly on February 13, 1946, are quoted as follows: "Article IV OFFICIALS "Section 18. Each specialized agency will specify the categories of officials to which the provisions of this Article and of Article VIII shall apply. It shall communicate them to the Governments of that agency and to the Secretary-General of the United Nations. The names of the officials included in this categories shall from time to time be made known to the above-mentioned Government. "Section 19. Officials of the specialized agencies shall: xxx xxx xxx (b) Enjoy the same exemption from taxation in respect of the salaries and emoluments paid to them by the specialized agencies and on the same conditions as are enjoyed by the officials of the United Nations." "Article V OFFICIALS "Section 18. Officials of the United Nations shall be: xxx xxx xxx (b) Be exempt from taxation on the salaries and emoluments paid to them by the United Nations." The Convention on the Privileges and Immunities of specialized agencies of the United Nations was adopted and approved by the General Assembly of the United Nations and is binding upon the Republic of the Philippines as one of the members of the United Nations. Section 18 of both Articles are specific as to who are the employees or officials entitled to tax-exemption. Only officials of the United Nations and of the specialized agencies of the United Nations whose names are included in the list of officials which shall from time to time be communicated and made known to the Governments of member-nations are exempt from the payment of income tax in respect of the salaries and emoluments received by them from the Organization. In this case, however, there is no showing that such communication has been made wherein your agency and the name of your employees are included. Since the Refugee Services Philippines, Inc. is only implementing projects in behalf of the United Nations High Commissioner for Refugees (UNHCR) under a contract, the contractual relationship between your organization and the UNHCR indicates that your personnel or officials are not officials of the United Nations Organization or any of its specialized agencies. You cannot also be categorized as a specialized agency of the United Nations because you do not fall within the scope of "specialized agencies" as defined in Section 1, Article I of the Convention on the Privileges and Immunities of Specialized Agencies of the United Nations (adopted November 21, 1947). The amounts that you receive from the United Nations Organizations represent the consideration for the services that you render under your contract with it. Such being the case, your relationship with UNHCR is by virtue of a contract, an undertaking you have assumed from the Refugee Assistance Foundation, Inc. (RAF) and not as conferred under the provisions of the United Nations charters. In view of the foregoing, this Office is of the opinion and so holds that you and your personnel do not come within the scope of the tax exempting provisions of the Convention, and therefore, your request for tax exemption privileges has to be as it is hereby denied for lack of legal basis. Very truly yours, (SGD.) JOSE U. ONG Commissioner