Situs of Taxation
Situs of Taxation
Situs of Taxation
The test of taxability is the source, and the source of an income is that property, activity or service
which produced the income. (CIR vs British Overseas Airways Corp)
Note: The important factor which determines the source of income of personal services is not
the residence of the payor, or the place where the contract for service is entered into,
or the place of payment, but the place where the services were actually rendered.
4. Rentals and royalties from property located in the Philippines or from any interest in such
property
5. Gains, profits and income from the sale of real property located in the Philippines
6. Gains, profits and income from the sale of personal property, subject to the following rules:
a. Income is treated as derived ENTIRELY from sources within the country where the property is
SOLD if:
i. Purchased within and sold outside the Philippines (Not taxable in the PH)
ii. Purchased outside and sold within the Philippines (Taxable in the PH)
Exception: Gain from the sale of shares of stock issued by a domestic corporation is treated
as DERIVED ENTIRELY FROM SOURCES WITHIN the Philippines regardless of the place where
the shares are sold
2. Dividends other than those derived from sources within the Philippines
e.g. dividends received from a foreign corporation which derives less than 50% of its gross
income from sources within the Philippines
4. Rentals or royalties from property located outside the Philippines, or royalties for the use of or
for the privilege of using outside the Philippines patents, copyrights, secret processes and
formulas, goodwill, trademarks, trade brands, franchises and other like properties
5. Gains, profits and income from the sale of real property located outside the Philippines
• Income of Seamen
The situs of the income of seamen is not determined based on the citizenship of the vessel in
which they are on board. Income is considered earned in the place where the service was
actually rendered or where the vessel is docked for the purpose of rendering services.
In case of income of Filipino Seamen working on foreign vessels that touch Philippine ports to
load and unload cargoes, their services are considered rendered partly within and partly
without the Philippines.