Clarification of the Meaning of the Term "Doing Business"

March 19, 1987 BIR RULING NO. 081-87 24 000-00 081-87 Gentlemen : This refers to your letter dated December 9, 1986 requesting clarification of the meaning of the term "doing business" as defined in Section 1(1) of R.A. No. 5455 and quoted in Revenue Audit Memorandum Order No. 1-86 as follows: "'doing business' shall include soliciting orders purchases, service contracts, opening offices, whether called 'liaison' offices or branches . . . any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization." In reply, please be informed that this Office agrees with your opinion that the above-quoted provision covers only branches of foreign corporations engaged in business in the Philippines and does not apply to representative offices of foreign corporations not authorized to engage in any business activity in the Philippines. Representative offices which merely facilitate the orders of local distributors to their head offices without in any manner intervening or taking part in pricing, distributing or marketing of products are not considered "doing business" as defined in Revenue Audit Memorandum Order No. 1-86. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner