Tax Imposed on the Income of the Foreign Publisher of Newsweek Magazine

September 25, 1990 BIR RULING NO. 189-90 25 (b) (1) 094-90 189-90 Gentlemen : This refers to your letter dated June 15, 1990 requesting reconsideration of BIR Ruling No. 094-90 dated May 28, 1990 which revoked/modified BIR Ruling No. 557-88 dated November 24, 1988, the latter stating that the income of the foreign publisher of Newsweek Magazine consisting of the subscription payments by Philippine subscribers is not subject to Philippine income tax. aisadc In reply, please be informed that after a study of the reasons adduced in your said request, this Office finds the same to be untenable. It will be noted that the basis of the aforementioned revocation is the position of this Office that the source of an income is the property; activity or service that produced the income; 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; that the filling up of the subscription form by the Philippine subscriber to the Newsweek Magazine is the activity that produced the income consisting of the subscription payments and that since the subscription payments were made here and, therefore, came from the Philippines, the source of the income is this country. Consequently, such subscription payments are subject to Philippine income tax. The above position finds support in the decision of the Supreme Court in the case of Commissioner of Internal Revenue vs. British Overseas Airways Corp. (BOAC) and Court of Appeals, G.R. Nos. L-65773-74, April 30, 1987 pertinent portion of which reads: "The source of an income is the property, activity or service that produced the income. For the source of income to be considered as coming from the Philippines it is sufficient that the income is derived from activity within the Philippines. In BOAC's case, the sale of tickets in the Philippines is the activity that produces the income. The tickets exchanged hands here and payments for fares were also made here in Philippine currency. The situs abroad but in this country; hence, the income derived therefrom is a Philippine source income subject to income tax in this country." Moreover, even if the income of your client from subscription payments of Philippine subscribers is considered income from sale of personal property, the same is still a Philippine source income. Under Section 159 of Revenue Regulations No. 2, the situs of income from sales of personal property is the country where the property is marketed . Indubitably, the Newsweek Magazines in question are marketed in the Philippines. In view thereof, your request for reconsideration has to be, as it is hereby, denied for lack of merit. Very truly yours, (SGD.) JOSE U. ONG Commissioner