Liability of Saudia Arabian Airlines Corp. to the 15% Branch Profit Remittance Tax

April 1, 1986 BIR RULING NO. 028-86 24-b 000-00 028-86 Gentlemen : This refers to your letter dated August 13, 1985, requesting confirmation of your opinion to the effect that your client, Saudia Arabian Airlines Corporation (Saudia) is not a branch and is, therefore, not subject to the 15% branch profit remittance tax. Documentary evidence submitted show that Saudia is a multi-national company engaged in the business of international airline transportation of passenger and cargo; and that it has established a regional or area headquarters in the Philippines pursuant to P.D. No. 218. In reply thereto, I have the honor to inform you that as an on-line airline engaging in business in the Philippines, Saudia is considered a resident foreign corporation subject to the 2 1/2% tax on its gross Philippine billings pursuant to Section 24(b) (2)(i) of the Tax Code. Saudia is not entitled to tax exemption under P.D. No. 218 because for engaging in airline business in the Philippines it is deriving taxable income from Philippine source. Accordingly, being a branch, Saudia is subject to the 15% profit remittance tax on "any profit remitted abroad" to its head office pursuant to Section 24(b)(2)(ii) of the Tax Code. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner