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the corporate income tax return (BIR Ruling No. 136-89 dated July 4, 1989).
TIHDAa
A person is subject to VAT if it renders service "in the course of trade or business" (Section 105, 1997 Tax Code). Inasmuch as the operation of the representative office is similar to regional or area headquarters of multinational corporations which are exempt from VAT under Section 109 (p) of the 1997 Tax Code, representative offices are also exempt from VAT. Moreover, since Nissho Representative Office merely enables the overseas head office to maintain some presence in the country, and is not engaged in any income-generating activity in the Philippines, it is qualified for exemption from VAT. However, this exemption applies only to VAT directly due from representative offices (VAT Ruling No. 234-88 dated May 25, 1988 and BIR Ruling No. 136-89 dated July 4, 1989). On the other hand, please be advised that if you will remit technical service fees to your parent company, the said fees are considered royalties (Section 42 (A) (4) (f), 1997 Tax Code). Being Philippine source income of a representative office, the technical service fees are subject to Philippine corporate income tax at the rate of 32% (Section 28 (B) (1), Ibid.) which you will withhold as the payor-corporation and paid in the same manner and subject to the same conditions as provided in Section 59 of the 1997 Tax Code (Section 58, Ibid.) (BIR Ruling No. 136-89 dated July 4, 1989). Moreover, you are further advised that if you have employees, they are subject to the following income tax rates pursuant to Section 2.57.1 (D) of Revenue Regulations (Rev. Regs.) No. 2-98, as amended by Rev. Regs. 6-2001, as further amended by Rev. Regs. No. 12-2001, implementing Section 58 of the 1997 Tax Code: a. b. c. If a Filipino citizen, whether resident or non-resident, or a resident alien graduated tax rates of 5%-32%; If a non-resident alien engaged in trade or business in the Philippines graduated tax rates of 5%-32%; If a non-resident alien not engaged in trade or business in the Philippines 25% (BIR Ruling No. DA032-02 dated March 7, 2002).
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 as null and void.
aCSHDI
Copyright 1994-2009
Copyright 1994-2009