BIR Ruling No. 053-10

September 14, 2010 BIR RULING NO. 053-10 24 (A); BIR Ruling 012-89 Mr. Steinar Kristensen Paseo Park Viewsuites, Tower 1 Unit 17N 142 Valero Street 1227 Makati Sir : This refers to your letter dated June 17, 2010 requesting for a ruling that you may be classified as resident alien for tax purposes for taxable year 2007. It is represented that you are a Norwegian citizen; that you came to the Philippines in February 2007; that you applied for and were admitted to the Philippine Retirement Program of the Philippine Retirement Authority; that on June 13, 2007, you obtained a Special Retiree Residents Visa; that you have been staying in Makati from 2007 up to the present as evidenced by your Contracts of Lease for the years 2007 and 2008; and that you paid your taxes for the years 2007 and 2008 in the Philippines as a resident alien according to Philippine tax laws. Based on the foregoing representations, you now request, in effect, for a ruling that you 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. EcSaHA In reply, please be informed that as a consequence of obtaining the Special Retiree Residents Visa as a result of your admission to the Philippine Retirement Program under Executive Order No. 1037, your status for Philippine tax purposes was in fact converted to that of a resident alien subject to Philippine income tax under Section 24 (A) of the 1997 Tax Code, as amended. (BIR Ruling 12-89 dated February 3, 1989) Relative thereto, paragraph 1 of Article 4 of the RP-Norway Tax Treaty defines "resident of a Contracting State" as one who, under the laws of the State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. By reason of being a holder of a Special Retiree Residents Visa, you are considered to be a resident of the Philippines and as such meet the criterion of the above provision of the Tax Treaty. Inasmuch as you have paid your income taxes for 2007 in the Philippines, you have been taxed as a resident alien for 2007 both under Philippine tax law and under the Article of the RP-Norway tax treaty. Accordingly, as a resident alien, you are liable to pay Philippine income tax on your taxable compensation, business and other income in the Philippines as defined in Section 32 of the 1997 Tax Code. However, social security benefits, retirement gratuities, pensions and other similar benefits you receive from foreign government agencies and other institutions, private or public are not subject to income tax pursuant to Sec. 32 (b) (6) (c) 1997 Tax Code. 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. CIDTcH Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue