Income Tax Exemption of Resident Foreign Scientists and Staff Members of the International Agencies with Collaborative Agreements with PCARRD

May 16, 1994 BIR RULING NO. 105-94 21 000-00 105-94 Dr. Cledualdo B. Perez Executive Director Philippine Council for Agriculture, Forestry & Natural Resources, Research and Development (PCARRD) Paseo de Valmayor, Los Baos Laguna S i r : This refers to your letter addressed to the Chairman, Fiscal Incentives Review Board, dated July 7, 1993 which was indorsed to this Office on September 10, 1993 for resolution as to whether, income of resident foreign Scientist and Staff members of the International Organizations with collaborative arrangements with the Department of Science and Technology (DOST), Philippine Council for Agriculture, Forestry and Natural Resources, Research and Development (PCARRD), and National Agriculture and Resources Research and Development Network (NARRDN) is exempt from Philippine income tax. cdti Documents submitted disclosed that PCARRD is one of the five (5) Sectoral Planning Councils of the Department of Science and Technology (DOST) with the mandate of advancing agricultural growth and development of our country; that to effectively implement the national agriculture and resources research program, it is necessary to develop research capability in terms of manpower, facilities, funding and programs; that to augment research funds and to accelerate technology transfer in research, PCARRD has entered into agreements with funding agencies and international research centers such as United States Aid for International Development (USAID), the International Potato Center (CIP) and other similar agencies; and that in order to encourage funding agencies and international research centers to enter into cooperative agreements or relationship, PCARRD should provide appropriate incentives to encourage donation of research funds and facilitate the exchange of researchers, scientists and consultants between PCARRD and these international agencies (P.D. No. 1249). In reply, please be informed that in the case of foreign scientist and staff members of international agencies or organizations with collaborative arrangements with PCARRD, Section 5(c) of Presidential Decree No. 1249, which grants authority and incentives to PCARRD in its generation of foreign funding for research, provides "Section 5. In the event which necessitate the residence in the Philippines of scientists or staff members of the international agencies in connection with cooperative research agreement with PCARRD, the appropriate offices/departments of the Philippine government shall: xxx xxx xxx c) exempt these scientists and staff members from payment of Philippine income tax and other taxes accorded to expatriate scientists paid by international organizations; xxx xxx xxx" These tax incentives were not withdrawn by Executive Order No. 93 pursuant to the non-impairment clause of the Philippine Constitution (Sec. 1(a), E.O. 93). Accordingly, this Office is of the opinion, as it hereby holds that resident foreign scientists and staff members of international agencies/organizations with collaborative arrangements/agreements with PCARRD are exempt from Philippine taxation. cdtech Very truly yours, VICTOR A. DEOFERIO, JR. Acting Commissioner of Internal Revenue