Registration by PCI Pty Limited, A Corporation Organized and Existing under the laws of Australia of an Area or Regional Headquarters in the Philippines under the Business style of "James Hardi Asia" pursuant to the Provision of Article 58 of Executive Order No. 226 otherwise known as the Omnibus Investments code of 1987 Will Not Give Rise to the Creation of a "Permanent Establishment" defined under Article 5 of RP-Australia Tax Treaty

August 30, 1996 BIR RULING NO. 094-96 24 000-00 094-96 Leva Manabat Salgada & Co. 5/Floor, Chemphil Bldg. 851 Arnaiz Ave., Legaspi Village Makati City Attention: Atty . Mariano C . Ereso, Jr . Tax Principal Gentlemen : This refers to your letter dated August 6, 1996 requesting confirmation of your opinion to the effect that the registration by PCI Pty Limited, a corporation organized and existing under the laws of Australia of an area or regional headquarters in the Philippines under the business style of "JAMES HARDI ASIA" pursuant to the provision of Article 58 of Executive Order No. 226 otherwise known as the Omnibus Investments code of 1987 will not give rise to the creation of a "permanent establishment" as the term is defined under Article 5 of RP-Australia Tax Treaty. aisadc In reply thereto, please be informed that the activities of the regional or area headquarters established in the Philippines by a multinational corporation shall be limited to acting as a supervisory, communications and coordinating center for its subsidiaries, affiliates, and branches in the Asia Pacific Region; that the headquarters will not derive any income from sources within the Philippines and will not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines; that the multinational company will remit into the country such amount as may be necessary to cover its operations in the Philippines but which amount will not be less than fifty thousand United States dollars or its equivalent in other foreign currencies annually; and that the regional or area headquarters shall not be subject to income tax, VAT and all kinds of local licenses, fees and dues, imposts or any other local taxes or burdens. (Articles 58; Executive Order No. 286 otherwise known as the Omnibus Investments code of 1987). Pursuant to Article 5 of the RP-Australia Tax Treaty the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. It shall include especial; (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, oil or gas fuel, quarry or other place of extraction of natural resources; (g) an agricultural, pastoral or forestry property; (b) a building site; or construction, installation or assembly project, or supervisory activities in connection therewith where such site, project or activity continuous for more than six months; (l) premises used as a sales outlet; (j) a warehouse, in relation to a person providing storage facilities for others; (k) a place in one of the Contracting States through which an enterprise of the other Contracting State furnishes services, including consultancy services, for a period or periods aggregating more than six months in any taxable year/or year of income, as the case may be, in relation to a particular project, or any project connected therewith. In view thereof, and since a regional or area headquarters established in the Philippines by a multinational, corporation is limited only to acting as a supervisory, communications and coordinating center for its subsidiaries, affiliates and branches in the Asia Pacific Region, your opinion that the registration by RCI PTY Limited, an Australian corporation of an area or regional headquarters in the Philippines under the business style of "James Hardie Asia" pursuant to Article 58 of E.O. 226 will not create a "permanent establishment" within the purview of Article 5 of the RP-Australia Tax Treaty, is hereby confirmed. [BIR Ruling No. 178-85 September 30, 1985]. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. LLpr Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)