Philippines Tax Agency Issues Ruling on PE Rules for Service Fees Under DTA With Malaysia

The Philippine Bureau of Internal Revenue July 15 issued BIR Ruling No. ITAD 057-20, clarifying permanent establishment (PE) rules for service fees under the 1982 DTA with Malaysia. A Malaysian entity agreed to provide services to a Philippine entity under an agreement. The agency clarified that: 1) service fees paid to the Malaysian entity are income tax-exempt under the Philippine-Malaysian DTA; 2) the Malaysian entity didn’t constitute a PE in the Philippines because it didn’t engage in business, have a registered office or a fixed place of business, and render qualified services for more than six months; 3) the Philippine ...