BIR Ruling No. 161-82

May 4, 1982 BIR RULING NO. 161-82 24-a 088-82 161-82 Kawasaki Steel Corporation Room 305 Alcco Bldg. Ortigas Avenue, Greenhills San Juan, Metro Manila Attention: Mr . Hiroshi Nagamine Gentlemen : This refers to BIR Ruling No. 24-a-129-81-4-82 dated January 4, 1982 to the effect that you are exempt from all direct and indirect taxes on the importation of materials, supplies, and compensation for services paid out from the proceeds of the foreign loan contracted by the Metropolitan Waterworks & Sewerage System (MWSS) pursuant to Section 9(b) of Republic Act No. 6234 as amended by PD 425, otherwise known as the MWSS Charter, and in connection with Contract No. PG-6 entered into by and between the MWSS and your Joint Venture partnership with the Construction & Development Corporation of the Philippines (CDCP) for the water main construction under the Manila Water Supply Project; and that, you are, therefore, exempt from the corporate income, contractor's and compensating taxes, and your foreign personnel, from individual income tax. cdta In connection therewith, I have the honor to inform you that from the evidence subsequently gathered by this Office, it appears that the aforementioned tax-exemption has actually no factual nor legal basis. It is clear from the "Contract Documents for Water Main Construction" for PC-6, more particularly, on the Information for Bidders (clause IB-19 and Supplemental General Conditions (clause SGC-6) that the tax-exemption privileges are being extended only to certain imported equipment and materials and there is, in fact, no mention of services . Moreover, there is actually no imported services as contemplated under the MWSS Charter because together with the other contractors, local and foreign, you came to the Philippines and participated in the international competitive bidding conducted by MWSS for the implementation of Contract No. PG-6. Consequently, contractors, whether local or foreign, as well as their personnel who render services under Contract PG-6, are subject to the corresponding taxes. In view of the foregoing, this Office is of the opinion, as it hereby holds, that being a foreign corporation-contractor licensed to do business in the Philippines, you are subject to the corporate income and contractor's taxes imposed by Sections 24(b)(2) and 205 of the Tax Code as amended; and your foreign personnel shall be subject to the individual income tax prescribed by Section 22 of the same Code. cdti This revokes BIR Ruling No. 024-a-129-81-4-82 dated January 4, 1982. Very truly yours, RUBEN B. ANCHETA Acting Commissioner