Practice question
A head office remits operating funds to its representative office, and the evidence establishes these are internal funding rather than payment for income-generating services. A collector treats the remittance itself as profit solely because funds entered the office’s account. Which is best under Shinko?
- Any remittance is automatically profit
- Every foreign transfer is salary
- Mere receipt does not prove gain; the established funding character must be examined
- Only account size matters
- A representative office automatically earns every remittance
Legal references
- https://lawphil.net/judjuris/juri1918/aug1918/gr_l-12287_1918.html — Madrigal v. Rafferty, G.R. No. L-12287, August 7, 1918, main opinion
- https://lawphil.net/judjuris/juri2021/jul2021/gr_226287_2021.html — CIR v. Shinko Electric Industries, G.R. No. 226287, July 6, 2021, main opinion
- https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html — RA 12214, section 8 amending NIRC section 32
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