BIR Ruling

December 14, 1966 The Philippine National Bank Manila Attention: International Department Gentlemen : This refers to your letter requesting information as to whether or not the sight draft for $1,469.51 drawn by Australian Paper Manufacturer, Ltd., Melbourne, on General Paper Corporation, Manila, is subject to the 30% withholding tax. LLjur In reply, I have the honor to inform you that all persons, corporations, partnerships, and associations, having control, receipt, custody, disposal or payment, among others, of interest or income received or obtained from sources within the Philippines by a non-resident alien firm, or corporation, not engaged in trade or business within the Philippines and not having an office or place of business therein, regardless of where such interest or income is received by said non-resident alien firm or corporation, are required to withhold a tax equivalent to 30% thereon. (Sec. 54, NIRC, as amplified by Sec. 205, Rev. Reg. No. 2). As per invoice No. 12393 dated August 21, 1964, of the Australian Paper Manufacturer Limited, the non-resident alien firm directly liable to Philippine income tax, subject draft covers "interest charges against shipments of M.F. Bag Kraft Paper", due from the General Paper Corporation, Manila. Such being the case, the sight draft for $1,469.51 drawn by a non-resident foreign corporation, the Australian Paper Manufacturers Ltd. on General Paper Corporation of Manila is subject to the 30% withholding tax pursuant to Section 54 of the Tax Code. The subsequent claim of a third person, the National Bank of Australia, Limited, that subject draft does not cover interest due to the non-resident alien firm in question is of no moment considering the admission of the party directly liable to Philippine income tax that such draft covers interest charges against shipments of M.F. Bag Paper due from a domestic corporation. LLphil Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue