BIR Ruling No. 295-82

November 23, 1982 BIR RULING NO. 295-82 090-a 51-80 295-82 Community Mental Health Services Counseling/Resource Center Sabang, Morong, Bataan Attention: Mr . Steven Muncy Executive Director Gentlemen : This refers to your letter dated November 8, 1982 requesting that the remunerations of the employees of the Community Mental Health Services (CMHS) be exempt from the withholding tax on wages. cd It is represented that the CMHS is a newly formed Philippine-based, non-profit implementing agency of the United Nations High Commission for Refugees (UNHCR); that the agency provides comprehensive psychological services for the Indochinese refugee and staff populations of the Philippine Refugee Processing Center (PRPC) in Morong, Bataan; that the staff of CMHS is composed of Filipino and foreign national professionals, a maximum of fifteen; that the special circumstances involved in an international effort of this nature necessitate short-term employment contracts; and that CMHS employees are contracted for only six months at a time. In reply thereto, I have the honor to inform you that pursuant to Section 90(a) (4) of the Tax Code, as amended, the term "wages" does not include remunerations paid for services by a citizen or resident of the Philippines for a foreign government or any international organization. Accordingly, since the CMHS is an agency of the United Nations High Commission for Refugees, remunerations paid by CMHS to its employees are not subject to the withholding tax on wages. Moreover, since the CMHS is fully funded by the UNHCR, remunerations paid to its employees are exempt from income tax, pursuant to Section 18(b) of the Convention on the Privileges and Immunities of the United Nations, which was adopted by the U.N. General Assembly on February 13, 1946. However, pursuant to Section 17 of the said convention, the operative act under which the tax-exemption shall be enjoyed is a certification to be submitted by the United Nations to our Ministry of Foreign Affairs. Unless such certification is secured and submitted, the said employees shall file their income tax returns and pay the income tax due from them. [Sec. 3(e), Revenue Regulations No. 6-82]. Very truly yours, RUBEN B. ANCHETA Acting Commissioner