BIR Ruling

September 4, 1973 Nippon Mining Company, Ltd. 7th Flr., China Banking Corporation Building Paseo de Roxas, Makati, Rizal Attention: Seita Ishiguro Gentlemen : This refers to your letter dated April 14, 1973 requesting information as to the tax consequences of your having been licensed by the Board of Investments and the Securities and Exchange Commission pursuant to Republic Act No. 5455 to engage in the following economic activities in the Philippines: "1. Acting as message center between Nippon Mining Company, Ltd., Tokyo and various mining companies; "2. Collecting available date relating to mining and other allied activities in the Philippines, such as shipping costs, weather conditions, market conditions, etc.; "3. Conducting credit investigations; "4. Undertaking market research, market survey and statistical studies which can exist in the financial and investment planning of Nippon Mining Company, Ltd., Tokyo; "5. Conducting preliminary discussions regarding the problem and prospects of Philippine mining companies; "6. Securing geological surveys with the assistance of licensed Philippine engineers and evaluation of claims, including assaying of mineral samples, upon the request of Filipino claim-holders to determine the feasibility of placing mines into operation to the end that the mineral products thereof be purchased by its head office; aisadc "7. Rendering of technical advice and technical assistance to mining companies so that the latter can comply with their contractual commitment to the head office; "8. Supervising shipping arrangements for a smoother delivery of mining products to smelters in Tokyo; "9. Supervising the procurement of minerals in the Philippines, for its head office in Japan, either directly or through a trading firm; and "10. Giving financial assistance to local mining enterprises." In reply thereto, I have the honor to inform you as follows: The foregoing economic activities constitute "doing business" in the Philippines, pursuant to Section 1 of Republic Act No. 5455. Accordingly, you are considered a resident foreign corporation engaged in trade or business in the Philippines and, therefore, taxable as provided in Section 24(a) of the Tax Code upon your total net income received from all sources within the Philippines. (Sec 24 (b)(2), Tax Code). Being subject to income tax, you are required to file quarterly declaration, pursuant to Presidential Decree No. 30 with or without income. Being a resident foreign corporation giving financial assistance to local mining enterprises if this activity consists of the practice of lending money at interest, you are subject to the lending investor's fixed and percentage taxes. (Sec 182(dd) and Sec. 195-A, Tax Code) For rendering technical advice and assistance, supervising shipping arrangement of mining products and supervising procurement of minerals, if all such services are for a fee, your corporation is subject to the fixed and percentage taxes as an independent contractor. (Sec. 182(A)(1) and Sec. 191, Tax Code). You are also subject to the basic and residence taxes under Commonwealth Act No. 465. You are required to keep books of accounts and records in accordance with Section 334 of the Tax Code. cdtech 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."