September 7, 2010

BIR RULING NO. 052-10

Section 22 (E); BIR Ruling No. 004-95; DA-266-98

SGV & Co.

6760 Ayala Avenue
1226 Makati City
Attention: Atty. Luis Jose P. Ferrer
Partner, Tax Advisory and Advocacy Group
Gentlemen :
This refers to your letter dated June 9, 2009 requesting, on behalf of your client
Deutsche Knowledge Services Pte. Ltd. (Deutsche) for confirmation of your opinion
that the following Filipino employees of Deutsche who were assigned abroad for less
than 183 days are still to be categorized as resident citizens of the Philippines
subject to Philippine income tax on income derived from services performed within
and outside of the Philippines:
1. Christopher Rudio
2. John Romualdo
3. Michelle Marie Acedilla
4. Voltaire Nuez
It is represented that these Filipino employees were assigned by their employer,
Deutsche to Deutsche Bank for purposes of training and work shadowing for a
period of less than 183 days, from April 2006 until April 2007; and that in this
regard, your client would like to seek certification that these employees are
considered "resident citizens" of the Philippines since they did not fall under the
definition of non-resident citizens of the Philippines for the calendar years 2006 and
2007 pursuant to Section 22 (E) of the National Internal Revenue Code of 1997.
In reply, please be informed that under Section 22 (E) of the Tax Code, as amended,
the term "non-resident citizen" means:
1. One who establishes to the satisfaction of the Commissioner the fact of his
physical presence abroad with a definite intention to reside therein.
2. A citizen leaving the Philippines during the taxable year to reside abroad,
either as an immigrant or for employment on a more or less permanent basis
and contract workers whose contract of employment are renewed from time
to time within or during the taxable year under such circumstances as to
require them to be physically present abroad most of the time during the
taxable year, shall be considered as a non-resident for such taxable year with
respect to the income he derived from foreign sources from the date he
actually departed from the Philippines.
3. A citizen who has been previously considered as non-resident citizen and who
arrives in the Philippines at any time during the taxable year to reside
permanently in the Philippines shall likewise be treated as a non-resident
citizen for the taxable year in which he arrives in the Philippines with respect

to his income derived from sources abroad until the date of his arrival in the
Philippines.
4. The taxpayer shall submit proof to the Commissioner of Internal Revenue to
show his intention of leaving the Philippines to reside permanently abroad or
to return to and reside in the Philippines as the case may be for purposes of
the said Section of the Tax Code.
Such being the case, and since the aforesaid employees were assigned abroad for
less than 183 days during a taxable year, they do not therefore, fall within the
purview of the above definition of non-resident citizen. Accordingly, this Office is of
the opinion as it hereby holds that the said employees are resident citizens. Hence,
their compensation income even if paid by a foreign employer through an agent in
the Philippines are subject to the tax imposed under Section 24 (A) of the Tax Code,
as amended. (BIR Ruling No. 004-95 dated January 6, 1995, and DA-266-98 dated
June 24, 1998)
This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then
this ruling shall be considered as null and void.
Very truly yours,

(SGD.) KIM S. JACINTO-HENARES

Commissioner
Bureau of Internal Revenue