Title II — TAX ON INCOME
(3) Compensation for labor or personal services performed without the
Philippines;
(4) Rentals or royalties from property located without the Philippines
or from any interest in such property including rentals or royalties
for the use of or for the privilege of using without the Philippines,
patents, copyrights, secret processes and formulas, goodwill,
trademarks, trade brands, franchises and other like properties; and
(5) Gains, profits and income from the sale of real property located
without the Philippines.
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(D)
Taxable Income From Sources Without the Philippines. — From the
items of gross income specified in Subsection (C) of this Section there
shall be deducted the expenses, losses, and other deductions properly
apportioned or allocated thereto and a ratable part of any expense, loss
or other deduction which cannot definitely be allocated to some items or
classes of gross income. The remainder, if any, shall be treated in full as
taxable income from sources without the Philippines.
(E)
Income From Sources Partly Within and Partly Without the
Philippines. — Items of gross income, expenses, losses and deductions,
other than those specified in Subsections (A) and (C) of this Section, shall
be allocated or apportioned to sources within or without the Philippines,
under the rules and regulations prescribed by the Secretary of Finance,
upon recommendation of the Commissioner. Where items of gross income
are separately allocated to sources within the Philippines, there shall be
deducted (for the purpose of computing the taxable income therefrom)
the expenses, losses and other deductions properly apportioned or
allocated thereto and a ratable part of other expenses, losses or other
deductions which cannot definitely be allocated to some items or classes
of gross income. The remainder, if any, shall be included in full as taxable
income from sources within the Philippines. In the case of gross income
derived from sources partly within and partly without the Philippines, the
taxable income may first be computed by deducting the expenses, losses
or other deductions apportioned or allocated thereto and a ratable part of
any expense, loss or other deduction which cannot definitely be allocated
to some items or classes of gross income; and the portion of such taxable
income attributable to sources within the Philippines may be determined
by processes or formulas of general apportionment prescribed by the
Secretary of Finance. Gains, profits and income from the sale of personal
property produced (in whole or in part) by the taxpayer within and sold
without the Philippines, or produced (in whole or in part) by the taxpayer
Isla Lipana & Co., the Philippine member firm of the PwC network
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