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PRESIDENTIAL DECREE NO. 1354
PRESIDENTIAL DECREE NO. 1354 -
IMPOSING FINAL INCOME TAX ON SUBCONTRACTORS AND ALIEN EMPLOYEES OF
SERVICE CONTRACTORS AND SUBCONTRACTORS ENGAGED IN PETROLEUM OPERATIONS
IN THE PHILIPPINES UNDER PRESIDENTIAL DECREE NO. 87
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WHEREAS,
foreign subcontractors involved in petroleum operations in the
Philippines are taxable as resident foreign corporations;chanroblesvirtualawlibrary
WHEREAS, the said foreign subcontractors perform transitory activities
during the taxable year and neither maintain regular office or fixed
place of business nor keep books of accounts in the Philippines;chanroblesvirtualawlibrary
WHEREAS, the aliens employed by the said service contractors and by
their subcontractors are likewise taxable on their income from
Philippine sources;chanroblesvirtualawlibrary
WHEREAS, it is also difficult to determine whether the said aliens are
resident aliens or nonresident aliens engaged or not engaged in trade
or business in the Philippines which in turn make it difficult to
determine their income tax;chanroblesvirtualawlibrary
WHEREAS, it is therefore necessary to simplify the method of taxing the
said foreign subcontractors and the aliens involved in petroleum
operations in the Philippines so as to insure the collection of
whatever tax that is due from them;chanroblesvirtualawlibrary
WHEREAS, in order to place local or domestic subcontractors on equal
footing and to make them competitive with foreign subcontractors, they
should similarly be taxed as foreign subcontractors. chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
decree as follows:cralaw:red
Section 1. Tax on subcontractors. — Every
subcontractor, whether domestic or foreign, entering into a contract
with a service contractor engaged in petroleum operations in the
Philippines shall be liable to a final income tax equivalent to eight
percent (8%) of its gross income derived from such contract, such tax
to be in lieu of any and all taxes, whether national or local:
Provided, however, that any income received from all other sources
within and without the Philippines in the case of domestic
subcontractors and within the Philippines in the case of foreign
subcontractors shall be subject to the regular income tax under the
National Internal Revenue Code. The term "gross income" means all
income earned or received as a result of the contract entered into by
the subcontractor with a service contractor engaged in petroleum
operations in the Philippines under Presidential Decree No. 87.
Section 2. Taxation of aliens employed by petroleum
service contractors and subcontractors. — Aliens who are permanent
residents of a foreign country but who are employed and assigned in the
Philippines by service contractors or by subcontractors engaged in
petroleum operations in the Philippines, shall be liable to a final
income tax equal to fifteen percent (15%) of the salaries, wages,
annuities, compensations, remunerations and emoluments received from
such contractors or subcontractors. Any income earned from all other
sources within the Philippines by the said alien employees shall be
subject to the income tax imposed under the National Internal Revenue
Code. chanroblesvirtualawlibrary
Section 3. Manner of collecting the tax. — (a) Every
service contractor shall deduct, withhold, and pay the tax imposed in
Section 1 of this Decree from the amounts paid by the service
contractor to the subcontractor under the contract entered into by and
between them in the same manner and subject to the same conditions as
provided in Section 54 of the National Internal Revenue Code.
(b) Every service contractor shall also deduct,
withhold and pay the tax imposed in Section 2 of this Decree from the
salaries, wages, annuities, compensations, remunerations and emoluments
paid to (1) its alien employees and (2) the aliens employed by its
foreign subcontractors in the same manner and under the same conditions
as provided in Section 54 of the National Internal Revenue Code.
(c) Every domestic subcontractor shall deduct,
withhold and pay the tax imposed in Section 2 of this Decree from the
salaries, wages, annuities, compensations, remunerations and emoluments
paid to its alien employees in the same manner and under the same
conditions as provided in Section 54 of the National Internal Revenue
Code.
Section 4. Registration of service contracts. — All
contracts relating to oil operations entered into between the service
contractor and a subcontractor engaged in petroleum operations in the
Philippines shall be registered with the Bureau of Energy
Development. chanroblesvirtualawlibrary
Section 5. Additional conditions for reimbursement
of operating expense. — The cost of subcontractors shall be considered
as part of reimbursable operating expenses of the service contractor
under Presidential Decree No. 87 only if it is shown that the contract
has been properly registered with the Bureau of Energy Development and
the taxes due under this Decree have been withheld and paid in
accordance with the provisions of Section 53 and 54 of the National
Internal Revenue Code.
Section 6. Repealing Clause. — Any provision of
existing general and special laws inconsistent with the provisions of
this Decree is hereby modified, amended or repealed accordingly.
Section 7. Effectivity. — This Decree shall take
effect upon approval.
DONE in the City of Manila,
this 21st day of April, in the year of Our Lord, Nineteen Hundred and
Seventy-Eight.
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