Non-interruption of the Business Operations of The Central Agency, Ltd. (Philippine Branch)

January 20, 1958 BIR RULING NO. 068-58 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. A. Box 589, Manila Gentlemen : Reference is made to your letter of the 15th instant, requesting information as follows: cdt "On July 5, 1956, we advised your office that our client, The Central Agency, Ltd., has decided to close and liquidate its branch office in the Philippines and to retire from business as of June 30, 1956. On the same date, we also advised the Securities and Exchange Commission of our client's decision to retire from business for purposes of securing the cancellation of its license. Since, then steps were taken to close down the trading activities of the Philippine branch of The Central Agency, Ltd. and after filing the required income tax return and settling outstanding liabilities, application was made to the Securities and Exchange Commission to cancel the trading license of the Philippine branch. Such cancellation, however, has not yet been effected up to the present. In the meantime, our client has invested some of its funds in shares of stock pending cancellation of its license. "By mid-year 1957 we were informed that the Head Office of The Central Agency, Ltd. was reconsidering its previous decision to close the branch and we have now been informed that this decision has been revised and that The Central Agency, Ltd. will resume its business operation in the Philippines during this year. Under the foregoing facts, we would like to ask your opinion on whether or not our client would still be subject to the residence tax for the years 1957 and 1958." In answer thereto, I have the honor to inform you that, the decision of The Central Agency, Ltd. to stop the business operations of its Philippine branch not having been actually effected, but on the contrary, the latter still exists and the trading license thereof remains uncancelled by the Securities and Exchange Commission, said branch has virtually engaged in business in the Philippines without interruption during the year 1956 up to the present. Accordingly, and on the assumption that your said client has said the corporate residence tax up to the year 1956, the same is still subject to said tax for the years 1957 and 1958, pursuant to Section 2 of the Residence Tax Law (C.A. No. 465). It may be stated, in this connection, that your client is further subject to the 25% surcharge for late payment of the tax for 1957, pursuant to Section 5 of the aforesaid law. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue