BIR Ruling No. 274-82

October 14, 1982 BIR RULING NO. 274-82 37-a 000-00 274-82 Atty. Pilipina N. Laborte Asst. Government Corporate Counsel 1203 A. Mabini St. corner Arquiza Ermita, Manila M a d a m : This refers to your letter dated October 27, 1981 requesting information on the tax treatment of the salaries and wages of the pilot and crew as complement of the helicopter to be leased by Okanagan Helicopter Services, Inc. to Philippine Aerospace Development Corporation under the provisions of the RP-Canada Tax Treaty. cdtech It is represented that your client, Philippine Aerospace Development Corporation is a government corporation; that it is embarking in a tie-up with Okanagan Helicopter Services, Inc. (OHL) for aircraft lease services operations; that OHL will supply Bell 214 helicopter and the complementary pilot and crew in connection with certain transmission powerline projects in the Northern Philippines; that the aircraft lease rentals as well the wages and salaries of the pilot and crew will be remitted in US Dollars to Okanaga in Canada by PADC. In reply, please be informed that Art. XV (Dependent Personal Services) paragraph 2 of the RP-Canada Tax Treaty provides: 2. "Notwithstanding the provisions of par. 1, remuneration derived by a resident of a Contracting State in respect of employment exercised in other Contracting State shall be taxable only in the first-mentioned State if the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned, and either: (a) the remuneration earned in the other Contracting State in the calendar year concerned does not exceed two thousand five hundred Canadian Dollars (C$2,500) or its equivalent in Philippine pesos or such other amount as may be specified and agreed in letters exchanged between the competent authorities of the Contracting States; or (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and such remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State." Applying the aforequoted provision of the RP-Canada Tax Treaty, considering that the wages and salaries of the pilot and crew will be paid by PADC, said income is taxable in the Philippines, if the pilot and crew stays in the Philippines for more than 183 days. Very truly yours, RUBEN B. ANCHETA Acting Commissioner