Special Investor's Resident Visa

April 18, 1989 BIR RULING NO. 079-89 22 (b) 000-00 079-89 Gentlemen : This refers to your letter dated March 29, 1989 requesting confirmation of your opinion to the effect that an alien investing in the Philippines, having been granted a special investor's resident visa under P.D. No. 1851 but not intending or not having decided to actually reside therein, will still be considered a non-resident alien for income tax purposes. aisadc It is represented that your client; Mr. Mark Takeuchi, a Japanese national is planning to invest in the Philippines; that with his planned investment, he will be qualified to apply for a special investor's resident visa pursuant to P.D. No. 1851, as amended; and that a special investor's resident visa is a permanent resident visa permitting a qualified alien to reside in the Philippines for definite period while his/her special investment in the Philippines is not withdrawn. In reply thereto, I have the honor to inform you that the rationale behind Presidential Decree No. 1851 is the government's policy to attract foreign investment into our country by providing incentives such as the issuance of a special investor's resident visa to aliens who are willing and able to invest the amount of at least US $75,000 in the Philippines; and that should the alien withdraw his said investment from the Philippines the special investor's resident visa issued to him will automatically expire. Thus, the special investor's resident visa is issued to entitle an alien who has invested US $75,000 to reside in the Philippines while his investment subsists and not for the purpose of determining his status for tax purposes. Considering that the tax status of your client under the aforementioned circumstances is not treated in the RP-Japan Tax Treaty then the pertinent provisions of the National Internal Revenue Code shall govern. Under Section 22(a)(1) of the Tax Code, a non-resident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than 180 days during any calendar year shall be deemed a non-resident alien doing business in the Philippines, Section 20(g) of the Tax Code notwithstanding. As such, he is subject to tax in the same manner as resident citizens and aliens on taxable income received from all sources within the Philippines. On the other hand, if the stay in the Philippines does not exceed 180 days during any calendar year, the individual is considered a non-resident alien not engaged in trade or business in the Philippines; hence, his entire gross income received from all sources within the Philippines is subject to income tax at the rate of 30%. (Sec. 22(b), Tax Code) Such being the case, since your client who has been issued a special investor's resident visa is not intending or has not decided to actually reside in the Philippines, your client is considered a non-resident alien not engaged in trade or business in the Philippines subject to a tax of 30% on his entire gross income received from all sources within the Philippines, pursuant to Section 22(b) of the Tax Code, as amended. Very truly yours, (SGD.) JOSE U. ONG Commissioner