Request for Exemption from Payment of Withholding Tax on Remittance to Be Made by Philippine Steel Coating Corp.

June 13, 1985 BIR RULING NO. 090-85 37-e 000-00 090-85 Gentlemen : This refers to your letter dated April 10, 1981 requesting exemption from the payment of withholding tax on the remittance to be made by Philippine Steel Coating Corporation (Philsteel) to your clients, John Lysaght International Holding Ltd. (Lysaght) and John Lysaght (Australia) Ltd. (JLA). It is represented that Lysaght is a Panamanian corporation which owns and holds title to items allegedly being purchased by Philsteel; that it is a non-resident foreign corporation not engaged in trade or business in the Philippines; that JLA, an affiliate of Lysaght is an Australian company and is engaged in the business of manufacturing and marketing galvanized or painted sheet steel and roll formed products; that Philsteel is a domestic corporation primarily organized to engage in the business of manufacturing and marketing galvanized or painted sheet steel and roll formed products; that Philsteel shall pay a total of $2 Million to Lysaght and JLA for certain letters patent, registered designs, trademarks, tradenames, operational manuals, confidential blue prints, designs and other detailed technical information related to the manufacture, operation and control of a plant for the manufacture of galvanized or painted sheet steel products. In reply, I have the honor to inform you that the document supporting your claim although denominated as Deed of Sale actually calls for the use of letters patent, registered designs, trademarks, tradenames, operational manuals, confidential blue prints, designs and the giving of technical information. Such being the case, the payments of Philsteel are considered royalties (Sec. 37(a)(4), Tax Code), subject to Philippine income tax and consequently to the withholding tax. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner