Tax Liability of MSHL

July 3, 1980 BIR RULING NO. 088-80 Messrs. Sycip, Gorres, Velayo & Co. P.O. Box 589, Manila 2800 Attention: Mr . C . C . Gison Tax Division Gentlemen : In reply to your letter dated February 6, 1980, I have the honor to inform you that based on your representation that your client, Manila Peninsula Hotel, Inc. (MPHI) entered into a Management Agreement with the HongKong and Shanghai Hotels Ltd. (HSHL), a HongKong corporation duly licensed to engage in business in the Philippines, whereby the latter shall manage the hotel in accordance with de luxe international standards, said HongKong corporation is a resident foreign corporation subject to corporate income tax based upon its total net income received from sources in the Philippines, pursuant to Section 24(b)(2) of the Tax Code of 1977, as amended. Accordingly, the management fees paid or payable to said foreign corporation by your client are not subject to the withholding provisions of Section 53(b)(2) of the same Code which applies to non-resident foreign corporations. However, said management fees shall be subject to the withholding tax of 5% pursuant to Section 1(b) of Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79, implementing Presidential Decree No. 1351 (now Section 53(f) of the Tax Code). Finally, MSHL shall be subject to the annual fixed tax of P100 and to the 3% contractor's tax imposed by Sections 192(1) and 205 of the Tax Code of 1977, as amended. Very truly yours, RUBEN B. ANCHETA Acting Commissioner