Income Tax Imposed on Non-Resident Corporation Not Engaged in Trade or Business Within the Philippines

June 29, 1960 BIR RULING NO. 280-60 Ross, Selph & Carrascoso Attorneys-at-law P. O. Box 781 M a n i l a Gentlemen : In reply to the query contained in your letter dated April 12, 1960, I have the honor to inform you that a non-resident corporation not engaged in trade or business within the Philippines is subject to the income tax on its gross income and not on its net income. (Section 24(b)(1) of the Tax Code, as amended) As the tax imposed on the aforesaid corporation is on gross income, no allowance for deduction may be claimed. Accordingly, "A", a nonresident corporation whose income is derived from royalties and rentals of its machines leased to local manufacturers, is not entitled to claim depreciation of its machines and the expenses incurred by it in sending mechanics to the Philippines periodically. "A", therefore, is subject to the 30% corporate income tax on the whole amount of rentals and royalties received by it from local manufacturers. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue