BIR Ruling No. 013-83

February 3, 1983 BIR RULING NO. 013-83 Gentlemen : This refers to your letter dated November 24, 1982 requesting a ruling on the inquiry of the Insular Bank of Asia and America on behalf of its client, Polyphosphates, Inc. as to whether or not its remittance of payments to Davy Powergas India Private Limited is subjected to withholding tax. It is represented that Polyphosphates, Inc., a domestic corporation entered into an agreement with Davy Powergas India Private Limited, incorporated under the Indian Companies Act of 1956 with offices at 254-D Dr. Annie Besant Road Worli, Bombay 400 025 whereby the latter shall evaluate the feasibility of dismantling its Phosphorous Burning Plant in Mexico, re-erection to a new site, monitor knockdown of plant, supervise knockdown and packing of dismantled plant items for safe transportation to port of Tampico, Mexico, and that the site on which the plant is to be dismantled and services performed is at Coatzacoalcos, Mexico. In reply, I have the honor to inform you that pursuant to Section 37(c)(3) of the Tax Code, payment for the services consisting of construction, management, coordination and supervision performed in Mexico, are considered income derived from sources outside the Philippines. Accordingly, and since a non-resident foreign corporation is subject to income tax only on income derived from sources within the Philippines, the remittances to be made by Polyphosphates, Inc., to Davy Powergas India Private Limited are not subject to income tax and consequently, to the 35% withholding tax prescribed by Section 24(b)(1) in relation to Section 53(e)(2) of the Tax Code, as amended. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue