Tax Consequences and Other Requirements for the Holding of a Tennis Exhibition named "Philip Morris Supermatch"

September 26, 1988 BIR RULING NO. 465-88 22 (b), 123 000-00 465-88 S i r : This refers to your letter filed on September 13, 1988 requesting in behalf of Great Wall Advertising Agency (Philip Morris Supermatch), for a ruling regarding the tax consequences and other requirements for the holding of a Tennis Exhibition named Philip Morris Supermatch to be held at the ULTRA on October 12, 1988 involving the services of Messrs. Miloslav Mecir and Yannick Noah, two foreign players coming from HongKong. You stated that admission tickets will be printed and sold for the said tennis exhibition. cdt You now pose the following questions 1. If Messrs. Mecir and Noah are paid there purses in the Philippines, what withholding taxes are due? If they receive their purses outside the Philippines, what withholding taxes are due? 2. What national amusement taxes are to be due the BIR on the promotion? 3. Are the tickets to be sold required to be registered with the BIR before they are sold to the public? In your subsequent letter dated September 16, 1988, you added two (2) more questions, viz: 4. If the two tennis pros decide to donate their professional purses in the show in their entirety to the Philippine Tennis Association, what national taxes or withholding taxes are applied? 5. Also, if only the withholding taxes on their contractual purses for their pro performances in the Philippines are donated by them, what deductions do they enjoy? In reply, I have the honor to inform you as follows: 1. If Messrs. Mecir and Noah are paid in the Philippines, their fees shall be subject to a tax of 30% on the total amount thereof inasmuch as they are considered non-resident aliens not engaged in trade or business in the Philippines (their stay in the Philippines is for 180 days or less), pursuant to Section 22(b) of the Tax Code, as amended by Executive Order No. 37. Even if their fees are not paid in the Philippines but elsewhere, the said foreign players are subject to the 30% tax on their professional fees. 2. The holding of a tennis exhibition is not one of the activities subject to the amusement tax prescribed by Section 123 of the Tax Code, as amended. Hence, the proceeds to be derived from said Tennis Exhibition is exempt from the amusement tax prescribed therein. 3. You are required to register with the Bureau of Internal Revenue the admission tickets to the proposed tennis exhibition before they are sold or disposed of pursuant to Section 17 of Revenue Regulations No. V-1. (See BIR Rulings dated February 17, 1953 and July 9, 1953). 4. If the professional purses of Messrs. Mecir and Noah exceed P1,000.00 and they shall donate the same to the Philippine Tennis Association, the said donation shall be subject to the rates of donor's tax under Section 92(a) of the Tax Code, as amended and shall not be allowed as deduction in computing the 30% tax due them. 5. It is not legally possible for Messrs. Mecir and Noah to donate to the Philippine Tennis Association the withholding taxes due on their contractual purses paid to them for their pro exhibition in the Philippines. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner