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Copyright 2013 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia First Release 2013 1

March 16, 1989

BIR RULING NO. 037-89

71 (a) 88-81 037-89

Gentlemen :

This refers to your letter dated February 10, 1989 requesting in behalf of your

client, Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) Gmbh,

confirmation of your opinion that the salaries it pays to its employees are not subjectto withholding tax on wages, pursuant to Section 71(a)(4) of the Tax Code, on the

ground that it is an international organization. cdtech

It is represented that GTZ is owned by the German Federal Government; that it

is a commercial enterprise with a development mission; that it is commissioned by the

Government of the Federal Republic of Germany to undertake specialist technical

cooperation with developing countries; that most of the activities of GTZ are carried

out on behalf of the German Federal Government on a non-profit basis and are

governed by international agreements between the Federal Government and the

partner countries; that GTZ is carrying out 2,000 projects in more than 100 African,

Asian and Latin American countries; that its work involves more than 3,000 staff

members, currently, in 28 offices abroad; that GTZ maintains an office in the

Philippines; and that it employs Filipinos in its Philippine office, the salaries of whom

are paid in German Deutschmarks and deposited in a German Bank.

In reply, please by informed that your opinion to the effect that the salaries

being paid by your client, GTZ, an international organization, to its employees are not

subject to the withholding tax on wages is hereby confirmed. Under Section 71(a) of

the Tax Code, as amended, the term "wages" means all remuneration (other than fees

paid to a public official) for services performed by an employee for his employer,

including the cash value of all remuneration paid in any medium other than cash,

except that such terms shall not include remuneration paid, among others for services

by a citizen or resident of the Philippines for a foreign government or an international

organization.

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Copyright 2013 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia First Release 2013 2

However, said Filipino employees are required to file their income tax return in

compliance with Section 44 of the Tax Code, as amended by Executive Order No. 273

[Sec. 3(f), Revenue Regulations No. 6-82]. cdasia

Very truly yours,

(SGD.) JOSE U. ONG

Commissioner