BIR Ruling [UN-214-94]

July 18, 1994 BIR RULING [UN-214-94] Del Monte Philippines, Inc. Citibank Center 8741 Paseo de Roxas Makati, Metro Manila Attention: Ms . Marianela CZ . Garcia Tax Officer Gentlemen : This refers to your application for relief from double taxation pursuant to Revenue Memorandum Order No. 10-92 relative to the business profits being derived by ITW Hi-Cone from the lease rental of its machine under a Lease Agreement executed and entered into by and between Del Monte Foods and ITW Hi-Cone on June 16, 1993. It is represented that ITW Hi-Cone, a division of Illinois Tool Works, Inc., is a Delaware Corporation, with principal Office at No. 1140 West Bryn Mawr Avenue, Itasca, Illinois, U.S.A.; that on June 16, 1993, ITW Hi-Cone, as Lessor, entered into a Lease Agreement with Del Monte Foods, as Lessee, a U.S. corporation based in San Francisco, California, to lease one (1) unit of Hi-Cone assembly machine, model 277B with serial Number 1017, for delivery, installation and use by the Lessee at Del Monte Philippines, Inc. (DMPI), Cagayan de Oro, Mindanao, Philippines; and that ITW Hi-Cone does not have a permanent establishment here in the Philippines. In reply, please be informed that pursuant to Article 8 (Business Profits) in relation to Article 5 (Permanent Establishment) of the RP-US Tax Treaty, the payments to be made to ITW Hi-Cone, a division of Illinois Tool Works, Inc. by DMPI in connection with the Lease Agreement executed on June 16, 1993 is not subject to Philippine income tax and consequently, to the 35% withholding tax, there being no permanent establishment where profits could be attributed in the Philippines (BIR Ruling No. 82-90 dated May 15, 1990). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. aisadc Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner (Legal Service)