BIR Ruling [DA-099-98]

March 23, 1998 BIR RULING [DA-099-98] Zamil Steel Buildings Co. Ltd. Unit 401, Heart Tower Condominium 108 Valero Street, Salcedo Village Makati City Attention: Luai Ghazaleh Manila Representative Gentlemen : This refers to your letter dated August 22, 1997 requesting for a ruling that your representative office in the Philippines, Zamil Steel Buildings Co . Ltd ., is exempt from the payment of taxes. LLjur It is represented that Zamil Steel Buildings Co. Ltd. is a corporation organized and existing under the laws of the Kingdom of Saudi Arabia; that it has established a representative office in the Philippines; that its purposes are the following, namely: "a) to conduct market research and feasibility study; "b) to report to head office economic position of the Philippines, report on new and prospect projects; "c) to contact government agencies for such information, and promote company's products for Pre-engineered Steel Buildings." and that its representative office in the Philippines does not generate any income. In reply, please be informed that pursuant to Section 28 (B)(1) of the Tax Code of 1997, a foreign corporation not engaged in trade or business in the Philippines shall pay a tax equal to thirty-five percent (35%) of the gross income received during each taxable year from all sources within the Philippines, such as interests, dividends, rents, royalties, salaries, premiums (except reinsurance premiums), annuities, emoluments or other fixed or determinable annual, periodic or casual gains, profits and income, and capital gains, except capital gains subject to tax under subparagraphs 5(c) and (d). However, considering that the representative office Zamil Steel Buildings Co. Ltd. does not generate income from its activities in the Philippines, it is exempt from the payment of taxes in the Philippines. (BIR Ruling No. 081-87 dated March 19, 1987) casia This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)