BIR Ruling

October 11, 1973 Mr. Rodolfo A. Ylag Resident Vice President Pago Pago Products, Ltd. 421 Puzon Building E. Rodriguez Avenue Quezon City Gentlemen : This refers to your letter dated January 30, 1973 requesting information as to the tax liabilities of that Corporation. cdta It is represented that, that corporation is organized and existing under the laws of the State of Hawaii, U.S.A., and licensed to do business in the Philippines by the Board of Investments and the Securities and Exchange Commission to purchase and/or manufacture for export from the Philippines various Philippine handicrafts; that despite the authority to engage in the business that Corporation is actually and, at present, is merely maintaining a branch office in the Philippines whose main business is limited to the inspection and control of the quality of woodcrafts and other handicrafts purchased from local suppliers and manufacturers and exported from the Philippines through letters of credit opened by the head office in favor of the local supplier and/or manufacturer; that the branch office receives regular remittances of money from the head office for the payment of regular and necessary expenses like payroll, office supplies, rentals and the like; and that no part of the remittances received is spent for the purchase of woodcrafts and various Philippine handicrafts from local suppliers and manufacturers for export. In reply, I have the honor to inform you that under the foregoing circumstances that Corporation is not subject to any internal revenue tax on business. However, being a resident foreign corporation, it is subject to income tax on income earned from all sources within the Philippines, pursuant to Section 24(b)(2) of the Tax Code. That Corporation is also subject to the basic and additional residence taxes imposed by Commonwealth Act No. 465. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."