Tax Liability of a Non-resident Alien Individual Engaged in Trade or Business Within the Philippines

June 8, 1960 BIR RULING NO. 254-60 Messrs. Lee, Orendain & Guzman Attorneys-at-Law 246 P. Casal St. San Miguel, Manila Gentlemen : Reference is made to your letter of the 31st ultimo, requesting information whether or not, under the following facts, your client, Mr. Klaus-Peter Heidreich, is subject to Philippine income tax: "We are addressing you this letter on behalf of our above-named client, a German temporary visitor in the Philippines, who is employed by Messrs. Farbwerke Hoechst A.S., Frankfurt/Main, West Germany. He is presently assigned by his principals with Messrs. Hoechst-Marsman, Inc., Pharmaceutical Dept. Manila. He does not get any salaries in the Philippines, but is being paid directly by his employer in West Germany". In answer thereto, I have the honor to inform you that a non-resident alien individual engaged in trade or business within the Philippines is subject to Philippine income tax on his entire net income received from all sources within the Philippines. There is no question that your said client is, for income tax purposes, a non-resident alien engaged in trade or business in this country, he having performed labor or personal services therein. Such being the case, and considering that compensation for labor or personal services performed within the Philippines, regardless of the residence of the payor, the place in which the contract of services was made, or the place of payment, constitutes income from Philippine sources, your client is subject to Philippine income tax on the salary for such labor or personal services, pursuant to Section 22(a) of the Tax Code, as amended by Republic Act No. 2343. (See sec. 37(a)(3), Tax Code, in relation to sec. 155 of Revenue Regulations No. 2.) Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue