Philippine Withholding Tax on Wages Liability of Local Helps

October 14, 1988 BIR RULING NO. 503-88 71 000-00 503-88 Gentlemen : This refers to your letter dated February 22, 1988 stating that local helps are employed on a contractual basis by our foreign service officers; and that said local helps may or may not be Filipino citizens but are residents of the countries wherein your Department maintains commercial offices such as: 1. United States 9. Korea 2. Canada 10. Netherlands 3. Brussels, Belgium 11. Saudi Arabia 4. Beijing, China 12. Singapore 5. France 13. Spain 6. HongKong 14. Sweden 7. Indonesia 15. United Kingdom 8. Japan Based on the foregoing representation, you now request a ruling as to whether or not said local helps are subject to Philippine withholding tax on wages. In reply, please be informed that the aforesaid local helps employed by our foreign service officers, who are Filipino citizens are considered non-resident citizens subject to Philippine income tax under Section 21(b) of the Tax Code and to the withholding tax on compensation of a citizen for services performed outside the Philippines under Section 7.11 of Revenue Regulations No. 6-82. As regards the local helps residing in the above countries who are not Filipino citizens, they are not subject to Philippine income tax; hence, not also subject to the withholding tax on wages. It is noted that said local helps are considered non-resident aliens not engaged in trade or business within the Philippines; hence, they are subject to income tax on income derived from sources within the Philippines. [Section 22(b), Tax Code] As regards, the compensation of said local helps, the same is considered income from without Philippines, since it was earned from personal service performed without the Philippines [Sec. 36(c)(3) of the Tax Code]. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner