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Gentlemen :
This refers to your letter dated February 18, 2009 requesting on behalf of
your client, Tsunetetsu (Cebu), Inc. ("TCI" or "Company" for brevity) for
confirmatory ruling that the service fees paid by TCI to Tsuneishi Holdings
Corporation ("THD" for brevity) under the Technical Consultancy Service
Agreement are not subject to income, withholding and value-added taxes.
II. Technical Assistance for stern frame and rudder structure production
works, and work incidental thereto
Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2019 2
section, and of managing and supervising works IaDSEA
In consideration for the above services, TCI shall pay THD a fixed monthly
service fees.
3. Section 108 (A) of the Tax Code of 1997, as amended, provides that
value-added tax (VAT) shall be imposed on gross receipts derived from the sale or
exchange of services, and the use or lease of properties. The same provision of the
Tax Code provides that the phrase "sale or exchange of services" means the
performance of all kinds of services in the Philippines for others for a fee,
remuneration or consideration. Conversely, services performed outside the
Philippines are not subject to VAT.
Since the services to be rendered by THD to TCI will be done outside the
Philippines and PEZA-registered export enterprises like TCI may not be passed on
with or claim input VAT, technical consultancy services pursuant to the
Agreement shall not be subject to VAT.
By:
Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2019 5