International Organization for Migration

March 23, 2018 ITAD BIR RULING NO. 045-18 Sec. 109 (K), NIRC of 1997, as amended; SA Convention; PH-IOM Cooperation Agreement International Organization for Migration Manila (Global) Administrative Centre 28th Floor, Citibank Tower 8741 Paseo de Roxas 1226 Makati City Gentlemen : This refers to your letter indorsed by the Department of Finance and the Department of Foreign Affairs in January 2018, requesting for the issuance of a proof of tax exemption on the interest income earned by the International Organization for Migration (IOM) on its deposits with Standard Chartered Bank (SCB). SICDAa Research shows that IOM was initially established in December 1951 as the Intergovernmental Committee for European Migration to help resettle the people displaced by World War II. IOM established its office in the Philippines in 1975. In 1988, the Philippines became an IOM Member State among the first Member States in Asia, with Manila as one of the first regional IOM offices in late 1996. It is an intergovernmental organization dedicated to promoting humane and orderly migration for the benefit of all by providing services and advice to governments and migrants. It works to help ensure the orderly and humane management of migration; promotes international cooperation on migration issues; and assists in the search for practical solutions to migration problems. As the leading intergovernmental agency in its field of specialization, IOM works in partnership with the United Nations (UN) on a broad range of migration-related issues. In June 2016, Member States of the UN, through the General Assembly, unanimously adopted a resolution approving the agreement to make IOM a related organization of the UN , and which, became official in September 2016. It now has 166 Member States and eight Observer States. In reply, please be informed that exemption on interest income of international organizations is generally governed by Section 32 (B) of the 1997 National Internal Revenue Code, as amended (Tax Code). It provides: " 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. xxx xxx xxx" In connection thereto, Article 3 of the March 13, 2003 Cooperation Agreement between the Government of the Republic of the Philippines and the International Organization for Migration (" PH-IOM Agreement ") provides that: "Article 3 1. The Organization shall enjoy in the Republic of the Philippines the same privileges and immunities as those granted to specialized agencies of the United Nations by virtue of the Convention on the privileges and immunities of the specialized agencies of 21 November 1947. x x x" Relative thereto, Article III, Section 9 of the Convention on the Privileges and Immunities of the United Nations (" SA Convention ") now applies, to wit: " Article III PROPERTY, FUNDS AND ASSETS xxx xxx xxx Section 9. The specialized agencies , their assets, income and other property shall be: (a) Exempt from all direct taxes : it is understood, however, that the specialized agencies will not claim exemption from taxes which are, in fact, no more than charges for public utility services; xxx xxx xxx" (Underscoring ours) Based on the foregoing, income of UN specialized agencies is exempt from direct taxes. The same tax exemption privilege of the UN specialized agencies shall also be enjoyed by the IOM. Hence, the interest income from deposits with the SCB by the IOM itself as an organization is exempt from tax, pursuant to the UN Convention in relation to the PH-IOM Agreement. This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling is without force and effect insofar as the herein party is concerned. DHIcET Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue