On October 2018, Mr.

Bald Nha, an American basketball coach was hired as a team consultant by one of
the teams in the Philippine Basketball Association (PBA) for one conference which will last for a period
of not more than three (3) months from October to December 2018. His coming to the Philippines was
for a definite purpose. However, he was subsequently chosen to coach the Philippine men’s basketball
team for a period of two (2) years. The American mentor intends to leave the Philippines as soon as his
job is finished. For 2018 taxable year, the American coach shall be classified as:

a. Resident alien.

b. Nonresident alien engaged in trade or business.

c. Nonresident alien not engaged in trade or business.

d. Resident citizen.

❖ Answer: A

o An alien who comes to the Philippines for the purpose that requires extended stay for its
accomplishment, so he makes his home temporarily in the Philippines, is a resident, regardless of his
intention to return to his residence abroad.

GUIDE:

o Alien + Indefinite stay = RA

o Alien + Extended stay (indefinite) = RA

o Alien + Definite stay + promptly accomplished = NRANETB

o Alien + Stays in the Phils, most of the time during the year (>180 days) = NRAETB

o Alien + Nonresident of the Phils. + Engaged in business = NRAETB

/ 9. Rihanna, an American singer, was engaged to sing for one week at the Western Philippine Plaza after
which she returned to USA. For income tax purposes, she shall be classified as.

a. Resident alien.

b. Nonresident alien engaged in trade or business.

c. Nonresident alien not engaged in trade or business.

d. Resident citizen.

Answer: C

o Alien + Definite stay + promptly accomplished = NRANETB

10. Mr. Almansor Sebastian, an Iranian and a resident of Tehran, Iran stayed in the Philippines from
Nov. 28 to Dec. 5, 2018 to watch the 2019 FIBA World Qualifying tournament held in MOA, Paranaque,
Philippines. During his stay, he bought equity investments from Alpha and Delta Corporations (domestic
corporations). He likewise invested in a mutual fund of Banko de Isla de Pilipinas, a local bank. Mr.
Almansor Sebastian is a:
a. Resident alien.

b. Nonresident alien engaged in trade or business.

c. Nonresident alien not engaged in trade or business.

d. Resident citizen.

❖ Answer: C

o Alien + Definite stay + promptly accomplished (watch the FIBA Qualifying Tournament) = NRANETB

o For income tax purposes, “dividends” from equity investments as well as “interest income from
investments” in mutual funds are not considered income from “business operations”. Incomes from
these investments are classified as passive incomes rather than business incomes.

Source(s) of Taxable Income

11. It is important to know the source of income for income tax purposes (i.e. from within and
without the Philippines) because:

a. Some individuals and corporate taxpayers are taxable based on their worldwide income while
others are taxable only on their income from sources within the Philippines.

b. The Philippines imposes income tax only on income from sources within.

c. Some individual taxpayers are citizens while others are aliens.

d. Export sales are not subject to income tax.

❖ Answer: A

o RCs and DCs = taxable on their income within and without the Philippines o NRCs, RAs, NRAs, RFCs,
NRFCs = taxable only on their income within the Philippines

12. Which of the following is correct?

I. A citizen of the Philippines residing therein is taxable on all income derived from sources within
and without the Philippines.

II. A non-resident citizen is taxable on income derived from sources within the Philippines only.

III. An alien individual, whether a resident or not of the Philippines, is taxable on income derived
from sources within the Philippines only.

IV. A seaman who is a citizen of the Philippines and who receives compensation for services
rendered abroad as a member of the complement of a vessel engage in international trade shall be
treated as an overseas contract worker.

a. I, II and III only c. I, II and IV only

b. I, III and IV only d. I, II, III and IV

❖ Answer: D