BIR Ruling No. 001-65

January 8, 1965 BIR RULING NO. 001-65 Messrs. Picazo & Agcaoli Attorneys-at-Law Soriano Bldg., Manila Gentlemen : This refers to your letter dated October 21, 1964 requesting information as to whether or not the receipts to be derived by your client, Chicago Bridge (Philippines) Inc., a domestic corporation engaged in construction work for construction to be performed in its entirety in Hongkong is subject to the 3% contractor's tax. The contract price is detailed as follows: Materials from Japan to be used in Hongkong $1,000.000 Cost of labor recruited in Hongkong 500,000 Overhead expenses to be incurred in Hongkong 300,000 Overhead expenses to be incurred in Manila 180,000 Estimated profit 20,000 Gross total $2,000,000 In answer thereto, I have the honor to inform you that the $2,000,000 to be received by your client for construction work totally performed in Hongkong shall not be subject to the 3% tax for the Philippine Government cannot reach the same by taxation for lack of territorial jurisdiction. "A state's power of taxation, however vast in its character and searching in its extent, is confined to subject which was within its jurisdiction, and the tax laws of a state can have no extraterritorial operation." (51 Am. Jur. Sec. 59, p. 88) LLphil Very truly yours, (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue