Withholding Tax on the $15,000 Remittance to the Tecumseh Products Company

July 18, 1960 BIR RULING NO. 304-60 The Ysmael Steel Mfg. Co. 222 Espaa Extension Quezon City Gentlemen : In answer to your letter dated July 14, 1960 wherein you requested exemption from the withholding tax on the $15,000 you are remitting to the Tecumseh Products Company of Michigan U.S.A., pursuant to a "Licensing Agreement" entered into by and between your company and said company, please be informed as follows: You claim that the remittance is in payment for engineering services rendered by Tecumseh in the United States. A close perusal however of paragraph 15 of your agreement discloses that the remittance is in reality of a royalty to Tecumseh Products Company for the privilege of manufacturing in this country motor compressors designed by it. As such, said royalty is income from sources within the Philippines and is therefore subject to the income tax. (sec. 337(4), Tax Code). The remittance in question is therefore subject to the withholding tax. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue