BIR Ruling [UN-131-95]

March 31, 1995 BIR RULING [UN-131-95] Republic of the Philippines Gold Association 209 Administration Building Rizal Memorial Sports Complex Vito Cruz, Manila Attention: Congressman Eduardo R . Ermita Gentlemen : In connection with the letter of Secretary Roberto F. de Ocampo dated February 17, 1995 indorsing to us your request to grant reduced tax for the winnings of foreign players in the 1995 Philippine Open Golf Championship, we would like to reiterate our opinion in our BIR Ruling No. 52-88 dated February 18, 1988, viz: xxx xxx xxx "However, with respect to the taxability of the cash prizes of said foreign players/participants, we have perused the different tax treaties concluded by the Philippines, notably, RP-Japan, RP-US, RP-Indonesia, RP-Singapore, RP-Australia and RP-Belgium. It is to be noted that the said tax treaties provide that income derived by athletes from their personal activities are taxed in the contracting state in which the activities are exercised, i.e., the Philippines. Accordingly, since the cash prizes are taxable in the Philippines and the players/participants are considered non-resident aliens not engaged in trade or business in the Philippines, then the aforementioned ruling subjecting them to a tax of 30% on the total amount of the cash prizes, pursuant to Section 22(b) of the Tax Code, as amended by Executive Order No. 37, is correct and should be maintained. "That Association may make proper representations with Congress of the Philippines for possible legislation modifying and/or revising the aforesaid 30% tax rate." cdt Very truly yours, ALICIA P. CLEMENO Assistant Commissioner Legal Service By: ALICIA L. TOMACRUZ Head Rev. Executive Asst. (Legal)