BIR Ruling No. 182-82

May 24, 1982 BIR RULING NO. 182-82 091-00 000-78 182-82 Philippine International Trading Corporation 302 ITC Building 337 Buendia Extension Makati, Metro Manila Attention: Mr . Apolinario A . Macalintal Corporate Secretary Gentlemen : This refers to your letter dated July 25, 1979 requesting information on the application of the withholding tax laws to the remunerations paid by you to your employees in your branch offices in HongKong and Hamburg. You have represented that you are a government-controlled corporation established under P.D. No. 1071; that your employees in said foreign branches consist of Filipinos who are permanent employees of your corporation assigned abroad on year-to-year basis subject to recall anytime; that they are paid their basic salaries either at your Manila office or at the branch office at the place of their assignment in the currency therein computed at the rate of exchange at the time of payment. You also stated you have employees in said foreign branches who are residents or nationals of the host countries. In reply, please be informed that under the foregoing facts, the Filipino employees are considered non-resident citizens falling under the category of contract workers as defined in Section 20(e) (2) of the Tax Code. Accordingly, they are subject to the individual income tax applicable to non-resident citizens prescribed in Section 21(f) of the same Code. Moreover, their salaries are subject to the withholding tax on wages as required by Section 91 of the Tax Code, since there is an employer-employee relationship between the payor and payee of the wages; and both the employer and the employee are within the taxing jurisdiction of the Philippine government. aisadc Accordingly, the full amounts of the compensation income of your Filipino employees assigned abroad whether paid here or in their country of assignment are subject to withholding tax on wages in accordance with the withholding tax table prescribed by Revenue Regulations No. V-8 as amended by Revenue Regulations No. 2-79. If paid in foreign currency abroad, the amount of withholding tax shall be the peso equivalent of the rate corresponding to their salaries in the withholding table in the said Revenue Regulations. Very truly yours, RUBEN B. ANCHETA Acting Commissioner