Non-extraterritorial Effect of the Exemption Enjoyed by the Earl H. Mayne Trust

September 23, 1959 BIR RULING NO. 466-59 Dr. Arturo A. Alafriz & Associates Suite 404 Regina Bldg. Escolta, Manila Attention : A . N . Bolmao, Jr . Gentlemen : Reference is made to your letter dated July 16, 1959 requesting your opinion on whether or not the provisions of section 53(b) of the Tax Code, as amended, apply to dividends declared by your client, the Atlantic Gulf & Pacific Co. of Manila, Inc., on shares owned by the Earl H. Mayne Trust, a non-resident trust, which has been officially exempted by the United States Treasury Department from the Federal income tax. The basis of the exemption, as stated, is because said trust is organized and operated exclusively for educational purposes. In reply thereto, I have the honor to inform you that the exemption enjoyed by the Earl H. Mayne Trust under the U.S. tax laws has no extraterritorial effect and hence is not enforceable in this country. In this jurisdiction, the Earl H. Mayne Trust is a taxable entity, subject to income tax on its gross income derived from all sources within the Philippines. Accordingly, the dividends paid to the trust is subject to the withholding tax provided for in section 53(b) of the Tax Code, as amended. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue