BIR Ruling No. 103-61

No date supplied BIR RULING NO. 103-61 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants 490 San Luis, Manila Gentlemen : This is in connection with your letter dated February 11, 1961, requesting a ruling on the question of whether or not capital gains realized by non-resident aliens not engaged in trade or business in the Philippines from the sale or disposition of capital assets held for more than twelve months, shall be taxed only to the extent of 50% of such gains. LLphil The pertinent provision of Section 23(b) of the Tax Code as amended by Republic Act No. 2343 reads as follows: "Sec. 22(b) Nonresident alien not engaged in trade or business within the Philippines . There shall be levied, collected and paid for each taxable year upon the entire income received from all sources within the Philippines by every nonresident alien individual not engaged in trade or business within the Philippines as interest, dividends, rents, salaries, wages, premiums, annuities, compensations, remuneration, emoluments, or other fixed or determinable annual or periodical gains, capital gains, profits, and income, a tax equal to twenty per centum of such income: . . ." The law as amended provides that the tax to be paid by non-resident alien not engaged in trade or business within the Philippines shall be based on his entire income from all sources within the Philippines and expressly includes capital gains. However, under Section 34(b) of the Tax Code, only 50% of the capital gains is taxable if capital asset sold was held for over twelve months. In view thereof, this Office in of the opinion that capital gains realized by non-resident aliens not engaged in trade or business in the Philippines are also subject to the provisions of Section 34(b) regarding the percentage of gain or loss to be reported upon the sale of capital assets. LLjur Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue