- The Philippines Bureau of Internal Revenue (BIR) has issued a circular to clarify the taxation of cross-border services provided by nonresident entities.
- The circular is in response to a Supreme Court ruling that satellite airtime fees paid by a Philippine company to a nonresident entity are considered income sourced within the Philippines.
- The circular highlights the criteria identified by the Supreme Court for determining liability to final withholding tax (FWT) and final value-added tax (FVAT).
- Examples of international service provision include consulting services, information technology outsourcing, financial services, telecommunications services, engineering and construction services, educational institutions and training providers, travel agencies, hotels, and tour operators.
- The circular also applies the benefits received theory, stating that income derived from income-generating subjects attributable to stages occurring in the Philippines should be considered sourced from the Philippines for tax purposes.
Source: taxathand.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
