Philippine Income Tax Exemption Granted to a Japanese National

July 13, 1988 BIR RULING NO. 320-88 22 000-00 320-88 Gentlemen : This refers to your letter dated June 1, 1988 requesting a ruling as to whether Mr. Yoichi Hasebe, a Japanese national is subject to Philippine income tax in relation to the RP-Japan Tax Treaty. cdtech It is represented that Mr. Yoichi Hasebe is the president of Friendship Tours and Resorts Corporation; that he is based at your Office in Japan and comes to the Philippines and stays for not more than 183 days; that he oversees the operations of the company on a regular basis and wherever necessary; that he is not entitled to any compensation in the Philippines and receives actual reimbursable expenses such as meals, transportation, representation, business development and other related expenses; and that the request for ruling is in connection with Mr. Yoichi Hasebe's application for the renewal of his working visa (9-G). In reply, please be informed that Article 15 of the RP-Japan Tax Treaty provides, viz: Article 15 "(1) Subject to the provisions of Article 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in the other Contracting State. "(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting state shall be taxable only in the first-mentioned Contracting State if: (a) the recipient is present in that other Contracting State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other Contracting State, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in that other Contracting State. "(3) . . ." Such being the case, and since Mr. Yoichi Hasebe's stay in the Philippines is for a period not exceeding in the aggregate 183 days in a calendar year, he is not subject to Philippine income tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner