BIR Ruling No. 252-11

July 26, 2011 BIR RULING NO. 252-11 22 (F); 23 (D); 24 (A) (1) (c), RR 2; BIR Ruling No. DA-(C-169)449-09; BIR Ruling No. DA-290-2005; BIR Ruling No. DA-(C-169)449-09 Quasha Ancheta Pea & Nolasco 6th Floor Don Pablo Building 114 Amorsolo St., Legaspi Village, Makati City Attention: Mr. Alfredo Z. Pio de Roda III Tax Partner Gentlemen : This refers to your letter dated June 4, 2010, stating that your client, Mr. David Philip Beddow is a British national, currently residing at 32 Forbes, One Roxas Triangle, Cruzada St., Makati City. Mr. Beddow is the holder of a Special Resident Retiree's Visa (SRRV), No. M-005614 issued on 29 September 2005 by the Philippine Bureau of Immigration (BI). As a SRRV holder, he is entitled to permanent residency in the Philippines with multiple entry privileges. Since 2005, he has lived in the Philippines most of the time and even acquired a residential condominium unit in 2006 where Mr. Beddow currently resides. He also registered with BIR Revenue District Office No. 50, and was issued Tax Identification Number (TIN) 302-339-731-000 on 05 May 2006. In connection therewith, you now request confirmation of your opinion that Mr. Beddow is a resident alien for Philippine income tax purposes, as defined under Section 22 (F) of the 1997 Tax Code ("Tax Code"). Thus, as a resident alien individual, Mr. Beddow is subject to income tax in the same manner as a Filipino citizen, as provided in Section 24 in relation to Section 23 (D) of the Tax Code. He can also avail of the personal tax deductions and tax exemptions allowed to Filipino citizens under Sections 34 and 35 of the Tax Code, respectively. In reply thereto, please be informed that Section 22 (F) of the Tax Code defines a resident alien as "an individual whose residence is within the Philippines and who is not a citizen thereof." BIR Ruling DA-(C-169) 449-09, dated August 6, 2009 , further states that: "In reply, please be informed that under Sec. 22 (F) of the Tax Code of 1997, as amended, the term 'resident alien' means an individual whose residence is within the Philippines and who is not a citizen thereof. In relation thereto, portion of Sec. 5 of Revenue Regulations No. 2 (Income Tax Regulations) provides as follows, viz. : 'An alien actually present in the Philippines who is not a mere transient or sojourner is a resident of the Philippines for purposes of the income tax. Whether he is a transient or not is determined by his intentions with regard to the length and nature of his stay. A mere floating intention indefinite as to time, to return to another country is not sufficient to constitute him a transient. If he lives in the Philippines and has no definite intention as to his stay, he is a resident. One who comes to the Philippines for a definite purpose which in its nature may be promptly accomplished is a transient. But if his purpose is of such a nature that an extended stay may be necessary for its accomplishment, and to that end the alien makes his home temporarily in the Philippines, he becomes a resident, though it may be his intention at all times to return to his domicile abroad when the purpose for which he came has been consummated or abandoned.' TEIHDa Based on the foregoing, it can be deduced that an alien (or one who is not a citizen of the Philippines) may be considered a resident of the Philippines for income tax purposes if: (1) he or she is not a mere transient or sojourner, (2) he or she has no definite intention as to his stay , or (3) his or her purpose is of such a nature that an extended stay may be necessary for its accomplishment, and to that end the alien makes his or her home temporarily in the Philippines." (Emphasis ours) Based on the BIR ruling and Income Tax Regulations above, it is clear that Mr. Beddow acquired residency in the Philippines. There is an intention on his part to stay in the Philippines indefinitely given the fact that: a) he is a SRRV holder; b) he acquired real property and is actually present most of the time in the Philippines since 2005; and c) he registered as a taxpayer with the BIR. All of these circumstances show that he is not a mere transient or sojourner. Thus, having acquired residency in the Philippines since 2005, this office holds that Mr. Beddow is a resident alien and is taxable as a resident alien for Philippine Income Tax purposes for the duration of his stay in the Philippines. Furthermore, Section 6 of the Income Tax Regulations provides: "SECTION 6. Loss of residence by alien. An alien who has acquired residence in the Philippines retains his status as a resident until he abandons the same and actually departs from the Philippines. An intention to change his residence does not change his status as a resident alien to that of a nonresident alien. Thus an alien who has acquired a residence in the Philippines is taxable as a resident for the remainder of his stay in the Philippines. " (Emphasis ours) As a resident alien individual, Mr. Beddow is subject to income tax in the same manner as a Filipino citizen, as provided in Section 24 in relation to Section 23 (D) of the Tax Code. He can also avail of the personal tax deductions and tax exemptions allowed to Filipino citizens under Sections 34 and 35 of the Tax Code, respectively. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue