rr 1-79

SECTION 1. Scope. These amended regulations shall govern the manner o ta!ation o non-
resident citi"ens as provided or under Section #1 o the Ta! Code$ as amended$ and shall %e &no'n as
(evenue (egulations No. 1-79.
In repl)$ please %e inormed that *+I,s -ilipino emplo)ees 'ho 'ere sent to 'or& in .ong*ong ma)
either %e permanent or contractual. The) are considered permanent i the) leave the /hilippines to
reside a%road on a more or less permanent %asis$ 0'hether or not his sta) a%road is less than 112 da)s34
and contractual i the) leave the /hilippines on account o a contract o emplo)ment 'hich is rene'ed
rom time to time 'ithin or during the ta!a%le )ear under such circumstances as to re5uire him to %e
ph)sicall) present a%road most o the time during the ta!a%le )ear$ 'hich means sta)ing a%road or not
less than 112 da)s during the ta!a%le )ear. 0Sec. #$ (evenue (egulations No. 1-79 dated 6anuar) 1$
19794 7I( (uling No. 892-193 /ermanent or contractual emplo)ees 0'ho sta)ed a%road or not less
than 112 da)s during the ta!a%le )ear3 shall %e considered non-resident citi"en 'ith respect to the
income derived in .ong*ong$ 'hich means that such income shall %e su%:ect to the preerential ta!
rate on the ad:usted gross income pursuant to Section #10%3 o the Ta! Code. ;i&e'ise$ -ilipinos 'ho
are alread) residents o .ong*ong 'hen hired %) *+I shall %e considered non-resident citi"ens su%:ect
to /hilippine income ta! under Section #10%3 o the Ta! Code and to the 'ithholding ta! on
compensation o a citi"en or services perormed outside the /hilippines under Section 7.11 o (evenue
(egulations No. <-1#. 07I( (uling No. =82-113 Contractual -ilipino emplo)ees o *+I 'hose sta)
a%road is less than 112 da)s shall %e ta!a%le as resident su%:ect to the graduated income ta! rate under
Section #10a3 o the Ta! Code.
In repl)$ please %e inormed that Section # o (evenue (egulations No. 1-79 dated 6anuar) 1$ 1979
implementing Section #10%3 o the Ta! Code$ as amended deine permanent emplo)ee as compared to
that o a contract 'or&er$ as ollo's>
In vie' thereo$ this Oice is o the opinion as it here%) holds that )our emplo)ees 'ho are deplo)ed
in 7ei:ing to assume various positions at the /alace .otel under and %) virtue o a :oint venture
agreement 'ith the o'ners thereo shall %e considered contractual emplo)ees. +ccordingl)$ in order to
%e considered as a non-resident citi"en su%:ect to the preerential ta! rate prescri%ed under Section
#10%3 o the Ta! Code$ the) shall %e re5uired to sho' proo o ph)sical presence a%road or a period o
at least 112 da)s rec&oned rom the date he actuall) departed rom the /hilippines as re5uired under
(evenue (egulations No. 1-79. cdtech
In repl) thereto$ I have the honor to inorm )ou that )our 5uestion is ans'ered in the negative. Section
# o (evenue (egulations No. 1-79 ampli)ing Section #80c3013 and 0#3 o the Ta! Code deines the
term ?non-resident citi"en? as one 'ho esta%lishes to the satisaction o the Commissioner o Internal
(evenue the act o his ph)sical presence a%road 'ith the deinite intention to reside therein and shall
include an) -ilipino 'ho leaves the countr) during the ta!a%le )ear as>
In vie' thereo$ and considering that )our 'ie is travelling on a tourist visa and that she does not have
an) permanent residence a%road$ this Oice is o the opinion as it here%) holds that )our 'ie is not a
non-resident citi"en 'ithin the contemplation o Section #80e3013 and 0#3 o the Ta! Code as
implemented %) (evenue (egulations No. 1-79. cdtech
2. 7usinessmen and proessional practitioners sta)ing a%road as holders o immigrant visas are
considered non-resident citi"ens$ even i such sta) is less than 112 da)s. The re5uirement o having
sta)ed outside the /hilippines or not less than 112 da)s during a ta!a%le )ear applies onl) in the case
o a contract 'or&er in order to %e considered ph)sicall) present a%road most o the time during the
ta!a%le )ear @Sec. #0c3$ (evenue (egulations No. 1-79A.
.o'ever$ pursuant to (evenue (egulations No. 1-7< as amended implementing Section 77 o the Ta!
Code$ the /a)or corporation is re5uired to render an inormation return 07I( -orm 178173 on the
remittances made in a calendar )ear to non-resident -ilipino citi"ens o dividends in the aggregate
amount o /1$188.88 or more. Since said dividends constitute income derived rom sources 'ithin the
/hilippines$ 0Sec. 27 0a30#30+3$ Ta! Code3$ the -ilipino recipients thereo 'ho are residing a%road must
ile income ta! returns on 7I( -orm No. 1781 or 1781+$ as the case ma) %e$ declaring therein said
dividends. The) shall also iled separate income ta! returns on 7I( -orm No. 1781 covering income
derived rom oreign sources. 0Sec. 9$ (evenue (egulations No. 1-79 dated 6anuar) 1$ 19793.
+ccordingl)$ )ou are considered a non-resident citi"en since )our services 'ere rendered a%road or
more than 112 da)s and$ thereore$ e!empt rom pa)ment o /hilippine income ta!. In this connection$
the phrase ?most o the time? 'hich is used in determining 'hen a citi"en,s ph)sical presence a%road
'ill 5uali) him as non-resident$ shall mean that the said citi"en shall have sta)ed a%road or at least
112 da)s in a ta!a%le )ear @Section # 0c3$ (evenue (egulations No. 1-79A. +S.ICc
Boreover$ %eginning -e%ruar) 12$ #88< up to the present$ )ou ma) still %e considered a non-resident
citi"en i )our services 'ere rendered a%road or more than 112 da)s in each o the )ears #88< and
#887 and$ thereore$ e!empt rom pa)ment o /hilippine income ta!. In this connection$ the phrase
?most o the time? 'hich is used in determining 'hen a citi"en,s ph)sical presence a%road 'ill 5uali)
him as non-resident$ shall mean that the said citi"en shall have sta)ed a%road or at least 112 da)s in a
ta!a%le )ear @Section # 0C3$ (evenue (egulations No. 1-79A.
Thus$ or purposes o e!emption rom income ta!$ a citi"en must %e deriving oreign-sourced income
or %eing a non-resident citi"en under Section #20C3 o the Ta! Code o 1997 or or %eing an overseas
contract 'or&er 0OCC3 under Section #2073 o the same Code. +ccordingl)$ the issue on 'hether or
not )ou are a non-resident citi"en depends on 'hether )our services are rendered a%road or more than
112 da)s in 'hich case said services are e!empt rom /hilippine income ta!. In this connection$ the
phrase ?most o the time? 'hich is used in determining 'hen a citi"en,s ph)sical presence a%road 'ill
5uali) him as non-resident$ shall mean that the said citi"en shall have sta)ed a%road or at least 112
da)s in a ta!a%le )ear 0Section #0c3$ (evenue (egulations No. 1-793. a+.TDS
Thus$ or purposes o e!emption rom income ta!$ a citi"en must %e deriving oreign-sourced income
or %eing a non-resident citi"en under Section #20C3 o the Ta! Code o 1997 or or %eing an overseas
contract 'or&er 0OCC3 under Section #2073 o the same Code. Eou ma) %e considered a non-resident
citi"en since )our services are rendered a%road or more than 112 da)s and are thereore e!empt rom
pa)ment o /hilippine income ta!. In this connection$ the phrase ?most o the time? 'hich is used in
determining 'hen a citi"en,s ph)sical presence a%road 'ill 5uali) him as non-resident$ shall mean that
the said citi"en shall have sta)ed a%road or at least 112 da)s in a ta!a%le )ear @Section #0c3$ (evenue
(egulations No. 1-79A. I.aCDE