Revenue Derived from Tickets Issued in the Philippines and Paid by the Employer in Saudi Arabia

April 1, 1987 BIR RULING NO. 087-87 25 (A) 000-00 087-87 Gentlemen : This refers to your letter dated February 23, 1987 requesting a ruling whether revenue derived from tickets issued in the Philippines and paid by the employer in Saudi Arabia of contract workers leaving from the Philippines form part of the gross Philippine billing of your client, Saudi Arabian Airlines, Inc. In reply, I have the honor to inform you that your query is answered in the affirmative. International carriers doing business in the Philippines, like your client, shall pay a tax of 2 % on their "Gross Philippine Billings". Section 25(a) (2)(A) of the Tax Code, as amended by Executive Order No. 37, defines "Gross Philippine Billings" as follows: "(A) International air carrier 'Gross Philippine Billings' means gross revenue realized from uplifts of passengers anywhere in the world and excess baggage, cargo and mail originating from the Philippines, covered by passage documents sold in the Philippines: Provided, That documents sold outside the Philippines under a 'prepaid ticket advice' scheme for passengers originating from the Philippines shall be considered as documents sold in the Philippines." Under the above-quoted provision, the tickets in question issued in the Philippines are considered sold in this country although the cost of the tickets is paid in Saudi Arabia. Moreover, assuming that said tickets were sold outside the Philippines under a prepaid ticket advice scheme for passengers originating from the Philippines, they are still considered sold in the Philippines; hence, the revenue derived therefrom forms part of the gross Philippine billings subject to 2 % income tax. atdc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner