BIR Ruling [UN-058-95]

February 10, 1995 BIR RULING [UN-058-95] SGV & Co. 6760 Ayala Avenue Makati Metro Manila Attention: Ms . Victoria A . Villaluz Gentleman : This refers to your letter dated 13 January 1995 in behalf of your client, Mr. Paul Shimada requesting for a waiver of the surcharge on his income liability for taxable year 1993. It is represented that your client is a non-resident alien who is an employee of a US corporation; that said clients was assigned to the Philippines to explore possible business opportunities; that in consideration of such services, he was paid salaries by his employer; that without intention to evade the payment of taxes, he failed to file a return and pay a tax on his Philippine sourced income for 1992 & 1993; that upon your advice, he learned that he qualifies as a non-resident alien engaged in trade or business in the Philippines and hence his Philippine sourced income is subject to tax under the Tax Code in relation to the RP-US Tax Treaty; that after being so advised, he availed of the abated privilege granted under RMO No. 45-93 and paid the basic income tax liability for 1992; that for lack of material time, your client was unable to file the application for abatement of his income tax liability for 1993; that based on your computation, your client's total tax liability for 1993 (inclusive of 25 % surcharge) interest up to 28 January 1995 and compromise penalty computed as follows: Basic tax liability P284,783.96 25% Surcharge [P284,783.96] 71,195.99 P355,979.95 =========== Interest 04-16-94 to 01-16-95 [P355,979.95 x 20 % x 276 days/365] P53,835.87 =========== Compromise penalty per BIR tables P23,500.00 TOTAL AMOUNT OF LIABILITY P433,315.82 Based on the foregoing, you now offer to pay the basic tax liability, interest up to the date of payment and compromise penalty which if paid on 16 January 1995 amounts to P351,352.66, computed as follows: Basic tax liability P284,783.96 Interest from 04-16-94 to 01-16-95 [P284,783.96 x 20% x 276 days/365] P43,068.70 Compromise penalty per BIR tables P23,500.00 TOTAL AMOUNT OF LIABILITY P351,352.66 =========== You likewise request that the 25% surcharge incident to late payment of the subject liability be waived. In reply, please be informed that in view of the above stated justifiable reasons, your request is hereby granted and your tender of payment is hereby accepted. You are therefore advised to remit to this office the said amount in payment for your client's income tax liability for the year 1993. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue