BIR Ruling No. 175-84

November 6, 1984 BIR RULING NO. 175-84 29-c-000-00-175-84 Gentlemen : This is in reply to your letter of July 14, 1984 requesting clarification regarding the taxability of your income from pensions and investments from abroad should you take up residence in this country. Income from pensions : Under the National Internal Revenue Code of the Philippines, social security benefits, retirement gratuities, pensions and similar benefits received by resident or non-resident citizens of the Philippines, or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, public or private, are exempt from tax . (Section 29(c)(7)(C) Under the RP-Canada Tax Treaty, pensions and annuities arising in Canada and paid to a resident of the Philippines shall be taxable only in Canada. However, in the case of periodic pension payments, the total tax so charged shall not exceed 30% of the amount by which the total of such payments made in any taxable period to a resident of the Philippines exceeds C$5,000 (Article XVIII). This means that for periodic pension payments in excess of C$5,000 a year, which are exempted in the Philippines, may be taxed in Canada at a rate not exceeding 30%. Income for Investments : Our Tax Code provides that an alien residing in the Philippines is taxable on his net income from all sources at the rates ranging from 5% in excess of P10,000 to 60% in excess of P500,000. (Sec. 21(b) NIRC) This includes interest, rents, dividends, securities or the transactions of any business carried on for gain or profit, or gains, profits and income of whatever kind and in whatever form derived from any source. However, since the Philippines has a tax treaty with Canada, any investment income derived in Canada will not be subject to double taxation in the Philippines. The same holds true for any investment income derived from any country with which the Philippines has entered into a tax treaty. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner