BIR Ruling No. 247-82

September 14, 1982 BIR RULING NO. 247-82 24-b 000-00 247-82 Messrs. Sycip, Salazar, Feliciano & Hernandez PAIC Bldg., 105 Paseo de Roxas Makati, Metro Manila Attention: Atty . Emmanuel C . Paras Gentlemen : This refers to your letter dated August 2, 1982 requesting confirmation of your opinion to the effect that your client, Vetco International Incorporated, Aguirre St., Legaspi Village, Makati, Metro Manila, a subcontractor engaged in geothermal operations in the Philippines is not subject to a final income tax equivalent to 8% of its gross income derived from its contract with PNOC-Energy Development Corporation (PNOC-EDC). It is represented that your client, a foreign corporation duly organized and existing under the laws of California, U.S.A. has been authorized to establish a branch in the Philippines to engage in the inspection or maintenance of oil field tubular goods and non-destructive testing for pipe and pipeline defects for the petroleum and other industry; and that your client has executed a contract of services with PNOC-EDC whereby your client renders inspection and related services on all drilling tabulars in connection with geothermal operations under P.D. No. 1442. In reply thereto, I have the honor to inform you that, under the foregoing facts, your client is a subcontractor of a service contractor engaged in geothermal operations under Presidential Decree No. 1442. Accordingly, it is not subject to the final income tax of 8% imposed by Presidential Decree No. 1354 which covers only a subcontractor of a service contractor engaged in petroleum operations under P.D. No. 87. However, your client is subject to the regular corporate income tax imposed by Section 24(b)(2) of the Tax Code, as amended on its total net income derived from all sources within the Philippines, one of which is its income from its service contract with PNOC-EDC. Moreover, your client is subject to the annual fixed tax of P100.00 and to the 3% contractor's tax on its gross receipts derived from the said service contract, pursuant to Sections 192 (1) and 205 (16) of the Tax Code, as amended. Very truly yours, TOMAS C. TOLEDO Acting Commissioner