Taxability of Service Fee Remitted to Worldwide Television News for Services Performed in New York and Hongkong
BIR Ruling No. 142-91 • Bureau of Internal Revenue (BIR) Issuances • Rulings (Numbered) • Aug 2, 1991
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August 2, 1991 BIR RULING NO. 142-91 25 (b) (1) 99-90 142-91 Gentlemen : This refers to your letter dated February 6, 1991 requesting for confirmation of your opinion that the service fee that you have been remitting to Worldwide Television News (WTN) are exempt from Philippine income tax since the services have been performed in New York and HongKong and therefore, the remittances to WTN are considered income derived from sources outside the Philippines. You represented that your subscription of Daily Satellite Service Pacific (DSSP) consists of International Video News in color; transmitted daily from New York and recorded in HongKong and delivered in 525-NTSC video cassette tape from Worldwide Television News, a non-resident foreign corporation. It is further represented that the agreement includes script materials to be received by the network from the wire service of UPI. In reply, please be informed that for the source of income to be considered as coming from the Philippines, it is sufficient that the income is derived from an activity within the Philippines. (Commissioner of Internal Revenue vs. British Overseas Airways Corporation (BOAC) and Court of Tax Appeals, G.R. Nos. 65773-74, April 30, 1987). In this respect, the test of the taxability is the "source" and the source of an income is the property, activity or service which produced the income. The word "source" conveys one essential idea, that of origin, and the origin of the income must be in the Philippines. On the basis of the foregoing, it is the opinion of this Office as it hereby holds that the remittances of service fees to the Worldwide Television News in consideration of your subscription of Daily Satellite Service Pacific consisting of international video news constitute income derived from sources within the Philippines. The activity which produced the income from within the Philippines and which, therefore, is taxable against the Worldwide Television News is the local subscription by RPN Television for the delivery by WTN of 525-NTSC video cassette containing colored international news, and script materials from the wire services of UPI. Very truly yours, (SGD.) JOSE U. ONG Commissioner
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