DA ITAD BIR Ruling No. 072-07

June 1, 2007 DA ITAD BIR RULING NO. 072-07 Article 21, Philippines-France tax treaty; BIR Ruling No. DA-ITAD-29-06 European International School Ecole Francaise de Manille 75 Swaziland St., Better Living Subdivision 1711 Paraaque City Attention: Odille Malay Gentlemen : This refers to your letter dated September 12, 2006, requesting for a Certificate of Tax Exemption for Ms. DELPHINE GOMES (Ms. Gomes), as a visiting teaching staff in the Philippines, pursuant to Article 21 of the Philippines-France tax treaty. It is represented that Ms. GOMES, immediately before her employment in the Philippines, was a resident of the French Republic with address at 5 Le Vallon 33370 Fargues St., Hilaire, France; that the European International School (Ecole Francaise de Manille) (hereinafter referred to as EIS-EFM) and Ms. GOMES entered into a Contract of Employment whereby Ms. GOMES is engaged to teach full time French language at EIS-EFM for the school year 2006-2008, from September 1, 2006 to August 31, 2008; that the employment ends on August 31, 2008 without requiring a resignation or further notice from EIS-EFM; and that in consideration of Ms. GOMES' services, she shall receive a monthly salary and will receive a 13th month pay in December pro rata to her months of service with the school. In reply, please be informed that Article 21 of the Philippines-France tax treaty provides as follows: " Article 21 TEACHERS AND RESEARCHERS 1. A teacher or a researcher who, resident of a Contracting State, visits the other Contracting State for the purpose of teaching or engaging in research shall be exempt from tax in that other Contracting State for a period not exceeding two years on remuneration in respect of such activities. TcCDIS 2. This Article shall not apply to income from research if such research is undertaken not in the general interest but primarily for the private benefit of a specific person or persons." Based on the aforequoted provision, it is clear that the remuneration paid to teachers who are residents of France and who stay in the Philippines for the purpose of teaching for a period not exceeding two (2) years shall not be subject to Philippine income tax. Such being the case, this Office is of the opinion and so holds that the subject remuneration of Ms. GOMES for teaching in EIS-EFM for a period not exceeding two (2) years, more particularly from September 1, 2006 to August 31, 2008, shall not be subject to Philippine income tax pursuant to Article 21 of the Philippines-France tax treaty. (BIR Ruling No. DA-ITAD-29-06 dated March 16, 2006) aDCIHE This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation it shall be disclosed or discovered that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service