BIR Ruling No. 127-82

April 21, 1982 BIR RULING NO. 127-82 029 (c) 000-00 127-82 The World Scout Bureau/Asia Pacific Region (Phil. Branch Office) P.O Box 7369, Airmail Distribution Center MIA Road, Metro Manila Attention: Mr . Daniel Orendain Office Manager Gentlemen : This refers to your letter dated September 17, 1981 requesting, in effect, determination of the qualification under Republic Act No. 4917 of the Retirement Plan for your employees. cdti It is represented that the World Scout Bureau/Asia Pacific Region was established in the Philippines in 1956 as a branch office of The World Organization of the Scout Movement with Headquarters in Geneva, Switzerland; that all employees of the Asia-Pacific branch office in the Philippines are covered by the retirement plan maintained by the World Organization of Scout Movement Geneva Headquarters; and that the establishment of a qualified retirement benefit plan for your employees is a pre-requisite to the approval of your application for waiver of coverage in the Home Development Mutual Fund (Pag-Ibig) under P.D. No. 1752. In reply, please be informed that being a foreign trust, the World Scout Bureau Employees' Pension Fund cannot qualify for tax-exemption under Republic Act No. 4917 (now Section 29(c)(7)(A), NIRC) as amplified by Revenue Regulations No. 1-68 because a qualified employees' trust under the aforesaid law is one which is organized or created in the Philippines as part of a pension, stock bonus or profit-sharing plan of an employer for the benefit of some or all of its employees, and maintained at all times as a domestic trust. In other words, in order to be qualified as an employees' trust under Republic Act No. 4917, the Retirement Plan for your Philippine Office personnel must, among others, be organized or established separately and maintained at all times in the Philippines and the entire retirement fund created to implement the provisions of the said plan must be invested and administered separately and independently from that of your Foreign Office personnel by a trustee or trustees whose residence is in the Philippines. In view thereof, the retirement benefits paid by you to all your Philippine Office personnel retiring under your present retirement plan which, as represented, is a contributory plan organized, created and maintained by the World Organization of Scout Movement Geneva Headquarters, effective conditionally on April 1, 1969 with the entire retirement fund being administered in Geneva, Switzerland, are subject to Philippine income tax and consequently to the withholding tax prescribed by Section 21 in relation to Section 91 of the Tax Code, as amended by Batas Pambansa Blg. 135 and as amplified by Revenue Regulations No. 20-81 dated December 16, 1981. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner