Foreign Corporations Extending Engineering Services

December 13, 1960 BIR RULING NO. 536-60 Mr. Cornelio Arcillo 804 Nicodemus St. Tondo, Manila S i r : With reference to your query dated September 17, 1959, please be informed that foreign corporations extending engineering services and under contract solely at the United States Army and Naval installations, in the Philippines are not subject to the contractor's tax and other percentage taxes under the National Internal Revenue Code, in view of the provisions of Article XVIII of the U.S.-P.I. Military Bases Agreement and the supplementary agreement of December 29, 1952 entered into between the Government of the United States of America and the Republic of the Philippines. Likewise, foreign corporations which are organized under the laws of the United States, resident in the United States, are not liable to pay income in the Philippines in respect of any profit derived under a contract made in the United States in connection with the construction, maintenance, operation and defense of the bases, pursuant to Article XII, par. 4, of the same Bases Agreement. However, foreign corporations, residents and authorized to do business in the Philippines are subject to the income tax, in accordance with the provisions of Section 24(b) of the National Internal Revenue Code, as amended by Republic Act No. 2343. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue