Philippines vs Snowy Owl Energy Inc, March 2021, Tax Court, CTA CASE No. 9618

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In 2013, Snowy Owl Energy Inc entered into a Consultancy Agreement (Subconsultant Services Agreement) with Rolenergy Inc. – a Hong Kong-based corporation organized and registered in the British Virgin Islands. Based on the Agreement, Rolenergy would serve as Snowy Owl Energy Inc’s sub-consultant.

The tax authorities issued an assessment for deficiency income tax (IT), final withholding tax (FWT) and compromise penalty in relation to the sub-consultant fees it paid for taxable year 2013.

Judgement of the Tax Court

The Court decided in favour of Snowy Owl Energy Inc.

Section 23(F)36 in relation to Section 42(C)(3)37 of the NIRC of 1997, as amended, provides that a non-resident foreign corporation is taxable only for income from
sources within the Philippines, and does not include income for services performed outside the Philippines.


Indubitably, the payments made in exchange for the services rendered in Hong Kong are income derived from sources outside of the Philippines, thus not subject to IT and consequently to FWT.


Philippines vs Snowy Owl Energy Inc. CTA_2D_CV_09618_D_2021MAR03_ASS


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