Professional Documents
Culture Documents
BIR Ruling (DA - (C-148) 406-09)
BIR Ruling (DA - (C-148) 406-09)
Gentlemen :
This refers to your letter dated July 14, 2009 requesting, on behalf of
your client, PAY-ON PHILIPPINES, INC. (PO-PHI), confirmation of your opinion
on the following issues regarding the tax liabilities of PAY-ON AG (PO-AG)
and PO-PHI:
1. PO-AG, as an online payment processing service provider, is
engaged in the sale of services, not goods;
2. PO-AG, as a non-resident foreign corporation performing online
payment processing services outside of the Philippines for
customers located inside as well as outside of the Philippines, is
not subject to Philippine taxation (income tax, withholding tax,
and value added tax) on fees collected in the Philippines for
customers located in the Philippines for such services performed
outside of the Philippines;
3. PO-PHI, the Philippine collecting agent of PO-AG, is likewise not
subject to Philippine taxation on fees collected by such agent in
the Philippines, considering that such fees are merely collected
by such agent for and in behalf of PO-AG, to be ultimately
delivered to the latter; and
4. PO-PHI, in rendering collecting and marketing services for PO-AG, is
liable for zero percent (0%) value added tax on and thirty percent
(30%) corporate income tax on fees earned from PO-AG.
It is represented that PO-AG is a corporation organized and existing
under the laws of Germany, with principal office located at Lucile-Grahn-
Strabe 37, 81675 Munich, Germany; that PO-AG is an e-commerce
application service provider that processes transactions between online
payment portals (such as a website) and an acquiring bank (which accepts
payments on behalf of online merchants); that the following are the
processing/technology services provided by PO-AG to Philippine customers
(local banks and payment gateways):
Footnotes
1. URL — Uniform Resource Locator Definition. The URL is the address of a
resource, or file, available on the Internet.
2. Section 27 (A) of National Internal Revenue Code provides that for domestic
corporations the rate of income tax shall be 30% effective Jan. 1, 2009.