Salary of the Locally Hired Filipino National or Resident Alien Working for ICMC in the Philippines Shall be Subject to Philippine Income Tax; Exemptions

June 21, 1991 BIR RULING NO. 117-91 21 031-91 117-91 Gentlemen : This refers to your letter dated November 23, 1990 requesting for a ruling as to whether the salaries of the employees of International Catholic Migration Commission (ICMC), an international organization of the Philippine Refugee Processing Center, are subject to tax. It is represented that the International Catholic Migration Commission (ICMC) is an international non-profit organization with headquarters in Geneva, Switzerland; that the main objective of the organization is to help refugees and migrants through resettlement, medical and educational programs; that their projects in the Philippines are 100% funded by the United States Department; that it entered into a Memorandum of Agreement with the Republic of the Philippines on July 15, 1988 where it was conferred diplomatic privileges and immunities; that the employees of ICMC filed their income tax returns for 1988 and 1989; that some of the employees were tax-exempt and entitled to refund; while others were given provisional assessments in the various regional offices where they filed; hence, this request for a uniform and definite ruling on the taxability of the ICMC employee's salaries. cdtech In reply, for reference we quote the pertinent provisions of the Convention of the Privileges and Immunities of the United Nations, adopted by the General Assembly on February 13, 1946, as follows: "ARTICLE IV OFFICIALS "SEC. 18. Each specialized agency will specify the categories of officials to which the provisions of this Article and the Article VIII shall apply. It shall communicate them to the Government of that agency and to the Secretary-General of the United Nations. The names of the officials included in this categories shall from time to time be made known to the above-mentioned Government. "SEC. 19. Officials of the specialized agencies shall. xxx xxx xxx (b) Enjoy the same exemption from taxation in respect of the salaries and emoluments paid to them by the specialized agencies and on the same conditions as are enjoyed by the officials of the United Nations." "ARTICLE V OFFICIALS "SEC. 18. Officials of the United Nations shall be. cd xxx xxx xxx (b) Be exempt from taxation on the salaries and emoluments paid by them to the United Nations." Pursuant to Article III of the Memorandum of Agreement between the Government of the Republic of the Philippines and the Catholic Migration Commission entered into on July 15, 1988, the President and the Secretary-General of the Commission, the international officials i.e., the Project Director, the Deputy Project Directors, shall enjoy the same privileges as those granted to executive heads, and international officials of specialized agencies by virtue of the Convention on Privileges and Immunities of Specialized Agencies of November 21, 1947. The convention also provides that the same privileges and immunities shall not be enjoyed by the locally hired Filipino nationals or resident aliens working with the Commission, except that these employees shall be immune from the jurisdiction of the judicial or administrative authorities of the Philippines in respect of acts performed in the exercise of their official functions and shall not be obliged to give evidence as witness in matters relating thereto. (Article III (3)) It is clear from the foregoing that the salary of the locally hired Filipino national or resident alien working for ICMC in the Philippines who is not the President, the Secretary-General, Project Director, Deputy Project Director, or any international official whose name is included in the list of officials which shall from time to time be communicated and made known to the Philippine Government, shall be subject to Philippine income tax pursuant to Section 21 (a) of the Tax Code. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner