BIR Ruling

October 1, 1969 Mr. John A. Victor ITT Philippines, Inc. P.O. Box 3794, Manila S i r : This refers to your letter dated may 5, 1969 requesting exemption from the payment of income tax on income derived from ITT Philippines, Inc., for services rendered on government projects exclusively.' LibLex It appears that on May 28, 1963, the Philippine government (hereinafter referred to as the Government) entered into a contract and agreement for the manufacture, delivery and installation of equipment, materials, and supplies for the Philippine government nationwide telecommunications expansion and improvement projects pursuant to Republic Act No. 2612 with ITT Philippines, Incorporated (hereinafter referred to as ITTP). Articles XVI and XVIII of the aforesaid contract in relation to Section 6 of Republic Act 2612 provides viz.: "Article XVI Specific Guarantees and Exemptions pursuant to R.A. 2612 . (2) Pursuant to Section 6 of R.A. 2612, the Government hereby agree that this contract, receipts and income derived from it, and all payments made pursuant thereto shall be exempt from all taxes, contributions and restrictions of the Republic of the Philippines, its provinces, cities and municipalities." "Article XVIII Tax Status of the Contractors Employees . The contractor and the engineers, specialists and other employees (exclusive of Filipino employees) furnished by the Contractor under the terms of this contract shall be reimbursed for all taxes, customs duties, and all fees and charges assessed and collected by the Philippine Government or any of its political subdivisions subject to the usual auditing and accounting regulations; provided, that such taxes, customs duties and fees and charges are assessed in connection with the Project; and provided, further, that major personnel goods and chattels shall be admitted on a re-export basis." In view thereof, income received from ITTP as compensation for services rendered on government project exclusively in accordance with the aforecited contract which was executed pursuant to Republic Act 2612 shall be exempt from the payment of all taxes. cdlex Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue