TITLE II TAX ON INCOME

CHAPTER I DEFINITIONS SEC. 22. Definitions - When used in this Title: (A) The term 'person' means an individual, a trust, estate or corporation. (B) The term 'corpor tion' shall include partnerships, no matter how created or organized, joint-stoc companies, joint accounts (cuentas en participacion), association, or insurance companies, !ut does not include general pro"essional partnerships and a joint venture or consortium "ormed "or the purpose o" underta ing construction projects or engaging in petroleum, coal, geothermal and other energ# operations pursuant to an operating consortium agreement under a service contract with the $overnment . '!ener " profession " p rtners#ips' are partnerships "ormed !# persons "or the sole purpose o" e%ercising their common pro"ession, no part o" the income o" which is derived "rom engaging in an# trade or !usiness. (&) The term '$o%estic&' when applied to a corporation, means created or organized in the 'hilippines or under its laws. (() The term 'forei'n&' when applied to a corporation, means a corporation which is not domestic. ()) The term 'non resi$ent citi(en' means: (*) A citizen o" the 'hilippines who esta!lishes to the satis"action o" the &ommissioner the "act o" his ph#sical presence a!road with a de"inite intention to reside therein. (+) A citizen o" the 'hilippines who leaves the 'hilippines during the ta%a!le #ear to reside a!road, either as an immigrant or "or emplo#ment on a permanent !asis. (,) A citizen o" the 'hilippines who wor s and derives income "rom a!road and whose emplo#ment thereat re-uires him to !e ph#sicall# present a!road most o" the time during the ta%a!le #ear. (.) A citizen who has !een previousl# considered as non resident citizen and who arrives in the 'hilippines at an# time during the ta%a!le #ear to reside permanentl# in the 'hilippines shall li ewise !e treated as a non resident citizen "or the ta%a!le #ear in which he arrives in the 'hilippines with respect to his income derived "rom sources a!road until the date o" his arrival in the 'hilippines. (/) The ta%pa#er shall su!mit proo" to the &ommissioner to show his intention o" leaving the 'hilippines to reside permanentl# a!road or to return to and reside in the 'hilippines as the case ma# !e "or purpose o" this 0ection. (1) The term 'resi$ent "ien' means an individual whose residence is within the 'hilippines and who is not a citizen thereo". ($) The term 'non resi$ent "ien' means an individual whose residence is not within the 'hilippines and who is not a citizen thereo". (2) The term 'resi$ent forei'n corpor tion' applies to a "oreign corporation engaged in trade or !usiness within the 'hilippines. (3) The term 'non resi$ent forei'n corpor tion' applies to a "oreign corporation not engaged in trade or !usiness within the 'hilippines.

(4) The term 'or$in r) inco%e' includes an# gain "rom the sale or e%change o" propert# which is not a capital asset or propert# descri!ed in 0ection ,5(A)(*). An# gain "rom the sale or e%change o" propert# which is treated or considered, under other provisions o" this Title, as 6ordinar# income6 shall !e treated as gain "rom the sale or e%change o" propert# which is not a capital asset as de"ined in 0ection ,5(A)(*). The term 6ordinar# loss6 includes an# loss "rom the sale or e%change o" propert# which is not a capital asset. An# loss "rom the sale or e%change o" propert# which is treated or considered, under other provisions o" this Title, as 6ordinar# loss6 shall !e treated as loss "rom the sale or e%change o" propert# which is not a capital asset. ($$) The term 6statutor# minimum wage6 shall re"er to the rate "i%ed !# the 7egional Tripartite Wage and 'roductivit# Board, as de"ined !# the Bureau o" 8a!or and )mplo#ment 0tatistics (B8)0) o" the (epartment o" 8a!or and )mplo#ment ((98)). (22) The term 6minimum wage earner6 shall re"er to a wor er in the private sector paid the statutor# minimum wage, or to an emplo#ee in the pu!lic sector with compensation income o" not more than the statutor# minimum wage in the non agricultural sector where helshe is assigned. SEC. 2*. T + on Non resi$ent A"ien In$i,i$- ". . (A) :on resident Alien )ngaged in trade or Business Within the 'hilippines. (*) 3n $eneral. - A non resident alien individual engaged in trade or !usiness in the 'hilippines shall !e su!ject to an income ta% in the same manner as an individual citizen and a resident alien individual, on ta%a!le income received "rom all sources within the 'hilippines. A non resident alien individual who shall come to the 'hilippines and sta# therein "or an aggregate period o" more than one hundred eight# (*;<) da#s during an# calendar #ear shall !e deemed a 6non resident alien doing !usiness in the 'hilippines6. 0ection ++ ($) o" this &ode not with standing. SEC. /0. T + 1"e Inco%e Define$. . The term ta%a!le income means the pertinent items o" gross income speci"ied in this &ode, less the deductions and=or personal and additional e%emptions, i" an#, authorized "or such t#pes o" income !# this &ode or other special laws. SEC. /2. C pit " ! ins n$ Losses. . 3A4 Definitions. - As used in this Title 304 C pit " Assets. - the term 6capital assets6 means propert# held !# the ta%pa#er (whether or not connected with his trade or !usiness), !ut does not include stoc in trade o" the ta%pa#er or other propert# o" a ind which would properl# !e included in the inventor# o" the ta%pa#er i" on hand at the close o" the ta%a!le #ear, or propert# held !# the ta%pa#er primaril# "or sale to customers in the ordinar# course o" his trade or !usiness, or propert# used in the trade or !usiness, o" a character which is su!ject to the allowance "or depreciation provided in 0u!section (1) o" 0ection ,.> or real propert# used in trade or !usiness o" the ta%pa#er.

324 Net C pit " ! in. - The term 6net capital gain6 means the e%cess o" the gains "rom sales or e%changes o" capital assets over the losses "rom such sales or e%changes. 3/4 Net C pit " Loss. - The term 6net capital loss6 means the e%cess o" the losses "rom sales or e%changes o" capital assets over the gains "rom such sales or e%changes. ?anuar# ;, *5@5 7)A):B) 7)$B8AT39:0 :9. <*-@5 0BB?)&T: 7egulations $overning the Ta%ation o" :on-resident &itizens T9: All 3nternal 7evenue 9""icers and 9thers &oncerned 'ursuant to the provision o" 0ection ,+C in relation to 0ection . o" the :ational 3nternal 7evenue &ode o" *5@@, as amended, the "ollowing regulations revising 7evenue 7egulations :o. 5-@, to implement the latest amendments to 0ection +< o" the same &ode !# '.(. :o. *./@ are here!# promulgated. 0)&T39: +. Who are considered as non resident citizens. D The term Enon-resident citizenE means one who esta!lishes to the satis"action o" the &ommissioner o" 3nternal 7evenue the "act o" his ph#sical presence a!road with the de"inite intention to reside therein and shall include an# 1ilipino who leaves the countr# during the ta%a!le #ear as: (a) 3mmigrant D one who leaves the 'hilippines to reside a!road as an immigrant "or which a "oreign visa as such has !een secured. (!) 'ermanent emplo#ee D one who leaves the 'hilippines to reside a!road "or emplo#ment on a more or less permanent !asis. (c) &ontract wor er D one who leaves the 'hilippines on account o" a contract o" emplo#ment which is renewed "rom time to time within or during the ta%a!le #ear under such circumstances as to re-uire him to !e ph#sicall# present a!road most o" the time during the ta%a!le #ear. To !e considered ph#sicall# present a!road most o" the time during the ta%a!le #ear, a contract wor er must have !een outside the 'hilippines "or not less than *;, da#s during such ta%a!le #ear. An# such 1ilipino shall !e considered a non-resident citizen "or such ta%a!le #ear with respect to the income he derived "rom "oreign sources "rom the date he actuall# departed "rom the 'hilippines. A 1ilipino citizen who has !een previousl# considered as a non-resident citizen and who arrives in the 'hilippines at an# time during the ta%a!le #ear to reside therein permanentl# shall also !e considered a non-resident citizen "or the ta%a!le #ear in which he arrived in the 'hilippines with respect to his income derived "rom sources a!road until the date o" his arrival.