Moto Industrial Traders Corp.

May 28, 2009 BIR RULING [DA-(C-078) 262-09] Section 25 (B), NIRC; DA-364-98; DA-081-06; DA-175-07; DA-541-07; & DA-008-08 Moto Industrial Traders Corp. Citiland Condo 10 (Tower II) Suite 1907 Ayala Ave. corner Dela Rosa Streets Salcedo Village, Makati City Attention: Marcelo R. Rasa Sales Engineer Gentlemen : This refers to your letter dated May 15, 2009, requesting the tax status of a Japanese technician coming to the Philippines to work for a duration of one (1) week to three (3) months in connection with machinery/equipment you bought from his Japanese company, since it is provided in an agreement that in case of repairs and other technical problems of the machines/equipments bought, the Japanese company will send a Japanese technician for the purpose and his compensation for services rendered shall be paid by the Japanese company in Japan. HSaCcE In reply, please be informed that Section 23 (D) of the Tax Code of 1997 provides: "An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines , . . . ." In the instant case, the Japanese technician who comes to the Philippines only on a special work arrangement assigned by his mother company, is non-resident foreign individual not doing business within the Philippines. Since, the compensation for his services rendered here in the Philippines is being paid by the Japanese company, such compensation is an income from without the Philippines. Accordingly, since the tax status of the Japanese technician is that of a non-resident alien individual who is not doing business in the Philippines and his compensation from rendering technical work on the machines/equipment constitute income derived from sources outside of the Philippines, the same is not subject to income tax. This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation, it will disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service