Tag: Source Of Income  

The place (or country) where a particular item of income is deemed to originate or where it is deemed to be generated. National rules vary, depending on which concept of source is used.

Costa Rica vs British Tobacco Centroamérica S.A. March 2022, Supreme Court, Case No 750-2022

Costa Rica vs British Tobacco Centroamérica S.A. March 2022, Supreme Court, Case No 750-2022

The tax authorities had started investigating a sales contract that British Tobacco Centroamérica S.A. had with a related company abroad for the import of goods. The historical price of the imported goods was compared to the price contained in the later sales contract. In the customs forms, the company declared one value, but in its invoices it recorded another value for the same products. The tax auditor discovered that the sales contract had a clause extending its scope to the provision of consultancy services. The company reported during the audit that the supplying company played a central role in the marketing of products that the local company made by assisting it in the elaboration of marketing studies, sales campaigns and quality studies. On this background an adjustment was issued for additional withholding tax for source income in the form of consultancy services provided by the non-resident. An appeal was filed by the Company. Judgement of the Supreme Court The Supreme ... Read more
Philippines vs Snowy Owl Energy Inc, March 2021, Tax Court, CTA CASE No. 9618

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

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. Excerpts: “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 ... Read more