BIR Ruling

October 6, 1969 Messrs. Sycip, Salazar, Luna Manalo & Feliciano 3rd Floor, Far East Building Buendia Avenue Makati, Rizal Gentlemen : This is in reply to your letter dated July 7, 1969 requesting confirmation from this Office to the effect that the royalties payable by Philippine Duplicators, Inc., a domestic corporations, to your client, Gestetner Limited, a foreign corporation engaged in trade or business in the Philippines are not subject to withholding tax. The withholding of tax at source under Section 53(b)(2) of the Tax Code, as amended, shall be required then the recipient of the income specified in subsection (b)(1) thereof is a foreign corporation not engaged in trade or business within the Philippines. However, where the recipient of any of the said income is a foreign corporation doing business in the Philippines, such income is not subject to withholding tax. All income received from all sources within the Philippines by foreign corporations doing business in the Philippines shall be returnable and taxable at the same rate as are applicable to domestic corporations. (Section 24(b)(2), Rev. Code). In view thereof, and inasmuch as your client is a foreign corporation engaged in business in the Philippines, this Office believes and so holds that its income from sources within the Philippines such as the royalties payable to it by Philippine Duplicators, Inc., are not subject to withholding tax. LibLex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue