AAA

January 9, 2019 ITAD BIR RULING NO. 001-19 Article XII, Section 45, PH-ADB Headquarters Agreement AAA _______________ Office of Protocol DEPARTMENT OF FOREIGN AFFAIRS 2330 Roxas Boulevard 1300 Pasay City Dear AAA, This refers to the letter dated 16 October 2018 from BBB of the Asian Development Bank (ADB),forwarded by your Office to this Bureau, requesting for a certification of income tax exemption in relation to the performance of the official duties of BBB in ADB. Documents submitted show that BBB is a national of Singapore, who presently works as Principal Director of the Office of Information Systems and Technology at the ADB; that as an accredited member of the ADB, she claims entitlement to immunities and privileges including exemption from the payment of income taxes in relation to her official duties and responsibilities, pursuant to the Agreement Between the ADB and the Government of the Republic of the Philippines regarding the Headquarters of the ADB (PH-ADB Headquarters Agreement);and that the aforesaid certification of tax exemption is being requested in connection with her membership as Board of Trustees of the International School Manila, Inc. (ISM). In reply, please be informed that under Section 32 (B) (5) of the National Internal Revenue Code of 1997, as amended, an income shall not form part of the gross income and is, therefore, exempt from tax if so provided under any tax treaty to which the Philippines is a signatory, thus: "SEC. 32. Gross Income . xxx xxx xxx (B) Exclusions from Gross Income. the following items shall not be included in gross income and shall be exempt from taxation under this Title: xxx xxx xxx (5) Income Exempt under Treaty. Income of any kind to the extent required by any treaty obligation binding upon the Government of the Philippines." In relation thereto, Article XII, Section 45 of the Agreement between the Government of the Republic of the Philippines and the Asian Development Bank regarding the Headquarters of the Asian Development Bank dated 22 December 1966 provides as follows: " Article XII PRIVILEGES AND IMMUNITIES OF GOVERNORS AND OTHER REPRESENTATIVES OF MEMBERS, DIRECTORS, PRESIDENT, VICE-PRESIDENT AND OTHERS Section 45 Officers and staff of the Bank, including for the purposes of this Article experts and consultants performing missions for the Bank, shall enjoy the following privileges and immunities: xxx xxx xxx (b) Exemption from taxation on or in respect of the salaries and emoluments paid by the Bank subject to the power of the Government to tax its nationals; xxx xxx xxx" Based on the foregoing, officers and staff of the ADB, who are not Philippine nationals, are exempt from tax in respect of salaries and emoluments paid by ADB. Considering that BBB, _______________ of the ADB, is an officer of the bank who is not a Philippine national, this Office is of the opinion and hereby confirms that BBB is exempt from tax on the salaries and emoluments paid to her by the ADB, pursuant to the PH-ADB Headquarters Agreement. However, any emoluments or allowances she will receive from the ISM as a member of its Board of Trustees, the performance of which does not form part of her duties and responsibilities as an ADB accredited member, shall be subject to income tax. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed 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, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue