BIR Ruling No. 143-62

December 13, 1962 BIR RULING NO. 143-62 Messrs. Carlos J. Valdes & Co. 1350 Marquez de Camillas M a n i l a Gentlemen : Reference is made to your letter dated November 16, 1962, stating the following: "A foreign airline company with a domestic agent operates under the following set-up: "1. The foreign airline company through its domestic agent solicits business in the Philippines; "2. The domestic agent issues tickets of the foreign airline company; breaking down a whole trip into a series corresponding to a different airline company thus "Sample Routing of one Ticket Issued Manila to Hongkong Airline Co. "A" Hongkong to San Francisco Airline Co. "B" San Francisco to New York Airline Co. "C" New York to Rome Airline Co. "D" Rome to Tokyo Airline Co. "E" Tokyo to Manila Airline Co. "A" "3. The receipt derived from the whole trip, then, though received in whole by the domestic agent and credited to the foreign airline company, are proportionately allocated to the different airline companies on the basis of their participation in the services rendered. "Query: "Referring to your letter of July 13, 1962, copy of which is here attached, wherein you stated that a foreign airline on company doing business in the Philippines is subject to the 2% common carrier's tax based on gross receipts. "What would constitutes the basis of the 2% common carrier's tax due from airline Co. B in the foregoing illustration. "Your letter of July 13, 1962, stated no income tax liability for the foreign airline company. Are we to conclude then that no income taxes shall fall due from the foreign airline Company. Should there be, what would be the basis ( Missing portion of BIR files ) In reply thereto, I have the honor to inform you that under the example given above, the total cost of the passage ticket although involving transshipment between points outside the Philippines is subject to the 2% common carrier's tax, the same to be liability of the airline company issuing the ticket. Being engaged in trade or business in the Philippines, the foreign airline company issuing the ticket is subject to income tax, the same to be determined in accordance with the formula prescribed by Section 163 of the income tax regulations. cdtech Very truly yours, JOSE B. LINGAD Acting Commissioner of Internal Revenue