Taxability of Global Marine Bismarck, Inc.

September 8, 1989 BIR RULING NO. 198-89 102-00 000-00 198-89 Gentlemen : This refers to your letter dated August 4, 1989 requesting a ruling on the taxability of Global Marine Bismarck, Inc., a foreign corporation organized and existing under the laws of the State of Delaware, U.S.A. It is ascertained that said corporation is a contractor engaged by you to perform drilling services in the Northwest Coast of Palawan; and that the duration of the contract is only seventy (70) days; and that under BIR Ruling No. 151-89 said foreign contractor is held not subject to Philippine income tax and to the 8% final tax under Presidential Decree No. 1354 pursuant to Article 8(l) in relation to Article 5 of the RP-US Tax Treaty. In reply, please be informed that based on the foregoing, Global Marine Bismarck Sea Inc., a foreign contractor organized under the United States law and engaged in selling services in the Philippines, is subject to the value-added tax of 10% pursuant to Section 102 of the Tax Code, notwithstanding the fact that its drilling contract with you calls for their stay in the Philippines for less than seventy (70) days. This opinion finds support in the fact that VAT is imposed upon the occurrence of a VAT-taxable transaction which is the sale of service to you. Moreover, it is not one of the VAT exempt transactions mentioned under Section 103 of the Tax Code, as amended by Executive Order No. 273. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner