BIR Ruling No. 088-82

March 23, 1982 BIR RULING NO. 088-82 24-a 000-00 088-92 Nippon Kokan K.K. Manila Project Office No. 22 Matalino Street Diliman, Quezon City Attention: Mr . T . Fushimi Construction Manager Manila Water Supply Project Gentlemen : This refers to BIR Ruling No. 24-a-129-81-221-81 dated November 10, 1981 to the effect that you are exempt from all direct and indirect taxes on compensation for imported services which is paid out of the proceeds of the foreign loan contracted by the Metropolitan Waterworks & Sewerage System (MWSS) pursuant to Section 9(b) of Republic Act No. 6234 as amended by PD 425, otherwise known as the MWSS Charter, and in connection with Contract No. PG-5 entered into by and between you and MWSS for the water main construction under the Manila Water Supply Project; and that, you are, therefore, exempt from the corporate income and contractor's taxes, and your foreign personnel from individual income tax. In connection therewith, I have the honor to inform you that from the evidence subsequently gathered by this Office, it appears that the aforementioned tax-exemption has actually no factual nor legal basis. It is clear from the said evidence consisting of " Contract Documents for Water Main Construction" for PG-5, more particularly on the Information for Bidders, General and Supplemental General Conditions, that the tax-exemption privileges are being extended only to certain imported equipment and materials and there is, in fact, no mention of services. Moreover, there is actually no imported services as contemplated under the MWSS Charter because together with other contractors, local as well as foreign, you came to the Philippines and participated in the international competitive bidding conducted by MWSS in the Philippines for the implementation of Contract No. PG-5. Consequently, contractors, whether local or foreign, as well as their personnel who render services under Contract PG-5, are subject to the corresponding taxes. cdti In view of the foregoing, this Office is of the opinion, as it hereby holds, that being a foreign corporation licensed to do business in the Philippines, you are subject to the corporate income and contractor's taxes imposed by Sections 24(b) (2) and 205 of the Tax Code as amended; and your foreign personnel shall be subject to the individual income tax prescribed by Section 22 of the same Code. This revokes B.I.R. Ruling No. 24-a-129-81-221-81 dated November 10, 1981. cd Very truly yours, RUBEN B. ANCHETA Acting Commissioner