Income from Managing the Operations of International Trade Exhibition in the Philippines Exempt from Income Tax

April 25, 1984 BIR RULING NO. 077-84 24-b-000-00-077-84 Gentlemen : This refers to your letter of January 16, 1984 requesting confirmation that the income of your client, ITF, Pte, Ltd. from managing the operations of international trade exhibition in the Philippines is exempt from Philippine income tax. It is represented that ITF, Pte, Ltd. is a foreign corporation organized and existing under the laws of Singapore; that it is an affiliate of the ITF Group of Companies which is engaged in the business of organizing trade exhibitions in different countries all over the world: that it will hold its 2nd International Mining Exhibition and Conference for the Asia Pacific Region in the Philippines on February 13-16, 1985; that the exhibition will be participated in by foreign and local exhibitors; that it is the organizer and will manage the operations of the exhibition which include the processing of applications for participation and the setting up and leasing out of space and booths in the Philippines to the exhibitors; that its income from the exhibit will be derived solely from space rentals or booth charges. In reply, please be informed that under Article 7 (Business Profits) of RP-Singapore Tax Treaty, a Singaporean corporation is taxable in the Philippines if it carries on business in the Philippines through a permanent establishment situated in this country. Under Article 5 (Permanent Establishment)of the same Tax Treaty provides that: "The furnishing of services, including consultancy services by a resident of one of the Contracting States through employees or other personnel, provided activities of that nature continue (for the same or a connected project) within the other Contracting State for a period or periods aggregating more than 183 days." In view of the foregoing, considering that the services of ITF, Pte, Ltd. in the Philippines will be less than 183 days, then ITF, Pte, Ltd. will not have a permanent establishment in the Philippines, hence the income that it will derive from such activities is exempt from Philippine income tax. cdta Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner