Director's Fees, Per Diems and Profit-sharing Bonuses Paid to the Nominees of the Roman Catholic Archbishop of Manila are Exempt from Withholding Tax

August 11, 1987 BIR RULING NO. 239-87 51 (f) 000-00 239-87 Gentlemen : This refers to your letter dated April 28, 1987 requesting confirmation of your opinion to the effect that director's fees, per diems and profit-sharing bonuses which are paid to the nominees of the Roman Catholic Archbishop of Manila are exempt from withholding tax. It is represented that the Roman Catholic Archbishop of Manila (RCAM) is a corporation sole which administers and manages the affairs, properties and temporalities of the Catholic Church; that it has investments in shares of stock of the Bank of the Philippine Islands (BPI); that on account of its shareholdings, it was able to elect directors-nominees in the BPI Board; that BPI will pay per diems and profit-sharing bonus for the attendance of the directors-nominees to the board and committee meetings; that the nominees were appointed by RCAM on the condition that they will turn over to RCAM all amounts they will receive from BPI as director's fees, per diems and bonuses; that RCAM has obligated itself to pay its nominees a fixed amount as compensation for acting as its representative in BPI's Board of Directors, and that RCAM will withhold the tax on this compensation paid to the nominees. In reply thereto, I have the honor to inform you that your opinion is hereby confirmed. Pursuant to Revenue Regulations No. 6-85 implementing Section 51(f) of the Tax Code otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations, payments only to persons enumerated therein are subject to the expanded withholding tax. Considering that amounts paid to directors of corporations are not among those specified in said Regulations, such payments are not, therefore, subject to the expanded withholding tax. Moreover, the director's fees, per diems and profit-sharing bonuses shall not be subject to the withholding tax on compensation income under Revenue Regulations No. 6-82 considering that the director's fees were not received by the director in his own behalf but are in fact intended for and received by RCAM. However, since the aforesaid payments are not subject to withholding, the payor shall render an information return on such payments pursuant to Section 71 of the Tax Code, as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner