Philippine Tax Liabilities of Mr. Knud Alfred Hansen, an Employee of BWSC Mindanao, Inc.

April 19, 1995 BIR RULING NO. 074-95 26 (b) (6) 000-00 074-95 Burmeister & Wain Scandinavian Contractor Mindanao, Inc. (BWSC Mindanao, Inc.) Suite 305 Jollibee Center San Miguel Avenue, Pasig Metro Manila Attention: Mr . Fleming Joergensen EVP & Treasurer Gentlemen : This refers to your letter dated November 18, 1994, in effect, requesting for a ruling on the Philippine tax liabilities of Mr. Knud Alfred Hansen, an employee of your company. cdt It is represented that Mr. Knud Alfred Hansen is a Danish national, who arrived in the Philippines on February 27, 1994; that he started working for your company on March 1, 1994; that he is receiving the amount of PHP119,000 per month representing his salary and allowance from the company; and that your company is withholding taxes from his salary since March 1994. In reply, please be informed that pursuant to Article XIII of the RP-Denmark Tax Treaty, pertinent portion of which provides: "ARTICLE XIII "INCOME FROM PERSONNEL SERVICES "(1) Subject to the provisions of Articles XIV-XVIII. XX and XXI wages and other similar remuneration derived by a resident of one of the Contracting States in respect of an employment and professional services, shall be taxable only in that State unless the services are rendered in the other Contracting State. If the services are so rendered, such remuneration as is derived from the other Contracting State may be taxed in that other State. "(2) Notwithstanding the provisions of paragraph (1). remuneration derived by a resident of Denmark in respect of an employment perform in the Philippines shall be taxable only in Denmark if: "(a) the recipient is present in the Philippines for a period or periods not exceeding in the aggregate 183 days in the taxable year concerned, and "(b) the remuneration is paid by, or on behalf of, an employer who is not a resident or corporation of the Philippines, and "(c) the remuneration is not borne by a permanent establishment which the employer has in the Philippines, and "(d) the aggregate amount does not exceed 12,000 Philippine pesos or its equivalent in Danish Kroner. Any amount in excess hereof may be taxed. "xxx xxx xxx" and pursuant to Article II, paragraph (2) of the same Treaty which provides that: "In the application of the provisions of this Convention by one of the Contracting States any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of this Convention." Mr. Hansen's is subject to the Philippine schedular income tax rate in the same manner as resident citizens and aliens, under Section 22(a) in relation to Section 21(a) both of the Tax Code, as amended, and consequently to the withholding tax prescribed under Section 72 of the Tax Code, as amended, and as implemented by Revenue Regulations No. 6-82, as amended on his remuneration received from your company. LibLex Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue