BIR Ruling No. 091-83

May 31, 1983 BIR RULING NO. 091-83 Gentlemen : This refers to your letter dated February 10, 1983 requesting a ruling as to whether or not contracts for services executed, consummated and perfected outside of the Philippines are subject to the 3% contractor's tax. It is represented that one of the main tasks of the Ministry of Tourism, through the Bureau of Tourism Promotion, is to design and execute a publicity and promotions program selling the Philippines to travellers in key target areas, namely: Japan, North America, Canada, Europe (U.K., Germany, Italy, Spain), Australia, Hong Kong, Singapore and the ASEAN region; that to achieve this goal, it is conducting a series of advertisements in select travel trade and consumer publications in said countries; that it also produces basic promotional brochures in English and other languages for distribution to its outlets abroad; and that in case of translated brochures, it contracts the services of printers abroad to translate and produce the required promo materials in order to save on time and freight costs. In reply, please be informed that contracts for services totally executed, consummated and perfected outside of the Philippines are not subject to the 3% contractor's tax for the Philippine Government cannot reach the same by taxation for lack of territorial jurisdiction. "A state's power of taxation, however, vast in its character and searching in its extent, is confined to subjects which are within its jurisdiction, and the tax laws of a state can have no extraterritorial operation." (51 Am. Jur. Sec. 59, p. 88) cdtech Very truly yours, (SGD.) ROMULO M. VILLA Acting Commissioner Bureau of Internal Revenue