Exemption from the Withholding Tax System

May 31, 1988 BIR RULING NO. 223-88 71 50 000-00 223-88 Gentlemen : This refers to your letter dated March 10, 1988 requesting certification to the effect that your client, Nippon Jogesuido Sekkei C., Ltd. of Japan is exempt from the withholding tax system since its foreign personnel are exempt from income tax. It is represented that your client is a consultant of the Government of the Philippines for the Rural Water Supply III Project under an Agreement for Consultancy Services entered into between the Government of the Republic of the Philippines represented by the Ministry of Public Works and Highways and Nippon Jogesuido Sekkei Co., Ltd. of Japan in association with Basic Technology and Management Corporation of the Philippines; and that the project is funded by the Overseas Economic Cooperation Fund of Japan (OECF) pursuant to the Exchange of Notes between the Philippine Government and the Japanese Government. In reply thereto, I have the honor to inform you that since the income of the foreign personnel of your client derived from the aforementioned project is exempt from the individual income tax prescribed under Section 22 of the Tax Code, as amended (BIR Ruling No. 25-124-87-138-88 dated April 14, 1988), said income is not subject to the withholding tax-at-source. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner