1. A Corp.

is a domestic corporation that entered into a contract with non-resident foreign

corporation, B Corp. B Corp. is contractually bound to render management services to A corp.’s
Singapore branch, where such services shall be performed. Is the income earned by B Corp.
from A Corp. be considered as income earned within the Philippines? Can the BIR collect taxes
from B Corp.? Explain.

No, the income earned by B. Corp from Corp A is not within the Philippines. Thus, the BIR cannot also
collect from B Corp. B Corp will be rendering its services to A Corp’s Singapore branch which means that
the corporation is located in Singapore and the services as well are performed in Singapore. According
to the Situs of Taxation, businesses are subject to tax in the place where the business is conducted.
Service fees are also subject to tax where they are rendered. Hence, the authorities of Singapore are in
charge of taxing both companies.

The general rule is that taxing power cannot go beyond the territorial limits of the taxing authority

The general rule is that taxing power cannot go beyond the territorial limits of the taxing authority
their own sources of revenues, levy taxes, fees and charges

2. A city in the Philippines passed an ordinance imposing income tax on installation managers. At
that time, Mr. Cruz was the only instalment manager of the city. He alone would be liable for
such tax. Is the tax constitutional?

Yes, the tax is still constitutional because only the constitution or the law has the power to grant
LGUs the power to create its own sources of revenue, impose taxes, fees and charges. Although
the city will get the income tax from the installation managers, the national government will still
receive a share from that tax.

3. U.S.Embassy in the Philippines is being required by the Bureau of Customs to pay customs duties
on all properties being transported to the Philippines, for use in the embassy by the ambassador
and other diplomatic offices. May the U.S. government be required to pay?
To develop respect with the laws of other countries, Embassies or other consular office are not subject
to pay income tax or property taxes. U.S Embassy is a foreign owned and controlled corporation, so it is
not subject to income tax. However, the importation of properties to the Philippines whether you are
resident or not is subject to tax. Thus, U.S government is required to pay the Philippine’s Bureau of
customs a transfer tax.

The role of the government is to promote the general welfare of its people. We may hate the
government or not, we may feel that the system is a total chaos, but it does not change the fact
that we need the government as much as the government needs us. In other words, the
government and people have a give and take relationship. Taxing people raises the fund of the
government to provide the needs of its people. Tax will serve as the basic necessity to fund
government expenditures

Taxation is the lifeblood of the government. It is the inherent power of the state to impose and
demand contribution upon the people, properties or right to generate revenue to support the
needs of people. Taxing does not also happen in an instant, because it is a legislative process to
make sure that a proportional contribution is levied upon its people for public purpose. Taxation
also pass its cost or burden those who benefited by its spending