BIR Ruling

June 26, 1972 Joaquin Cunanan & Co. Certified Public Accountants 1564 A. Mabini, Ermita Manila Gentlemen : This refers to your letter dated April 27, 1972 relative to your query as follows: "Columbia Pictures Industries, Inc. (CPII) is a corporation duly organized and existing under and by virtue of the laws of New York, U.S.A. for the purposes, among others, of producing and distributing motion pictures and television films. "Said corporation has a branch in the Philippines. It is conducting business within the Philippines and is licensed by the Securities and Exchange Commission to do so. It maintains an office in Manila and has duly appointed Filipino General Manager and personnel. It files its income tax returns with and submit its financial statements to the required branches of the Philippine government. Columbia pays the taxes due from its operation in the Philippines. "Due to the foregoing facts, may we know if Columbia Pictures Industries, Inc. Philippine Branch is bound to withhold taxes on its remittances to its Head Office (Columbia Pictures Industries, Inc. New York) of movie and T.V. film rentals, royalties and producer's share on earnings of motion pictures and T.V. films which were earned by Columbia from its business operations within the Philippines." In reply thereto, I have the honor to inform you that it appearing that CPII has a branch office in the Philippines thru which it conduct its business here, it is considered a resident foreign corporation. Accordingly, CPII is required to file income tax return thru its Philippine branch, declaring therein all its income derived from sources within the Philippines, which income is subject to corporate income tax in accordance with Section 24(b) of the Tax Code. Since CPII returns its income and pays income tax thereon, the remittances of the Philippines branch to CPII is not subject to the withholding tax provisions of Section 53 and 54 of the Tax Code. cdti Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue