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DA 393-03 International Traders
DA 393-03 International Traders
DA 393-03 International Traders
DOCTRINE: Obtech only enables the overseas head office to maintain some 4. If technical service fees will be remitted to the parent company, the said fees are
presence in the country and does not perform any income-generating activities, considered royalties. Thus, being Philippine-source income, the fees would subject to
thus it is exempt from income taxes and VAT. This exemption applies only to corporate income tax of 32% which the payor-corporation must withhold and pay in
VAT directly due from rep offices. the same manner and conditions as under Section 59.
FACTS: 5. If there are employees, they are subject to the following income tax rates:
1. International Legal Advocates sent a letter to the BIR requesting a ruling
1. Filipino citizen, whether resident or non-resident, or a resident alien — 5%–32%;
exempting its client, Obtech AsiaPacific Pte. Ltd. from payment of the value-added
and withholding taxes. 2. Non-resident alien engaged in trade or business in the Philippines — 5%–32%;
2. Obtech is a foreign corporation organized under the laws of Singapore and 3. Non-resident alien not engaged in trade or business in the Philippines — 25%
licensed to transact business in the Philippines and the Foreign Investments Act.
They have an office in Pacific Star Building, Makati City.
ISSUE:
Is Obtech subject to income tax and VAT? Not subject to VAT but remittances
are subject to income tax.
Ruling: