Practice question
A manufacturer produces goods in the Philippines and sells them abroad. This is not a mere purchase-and-resale transaction and no special exception applies. The manufacturer says Section42(E) makes the gain wholly foreign-source simply because the sale occurs abroad. Which is correct?
- Production within and sale without the Philippines produces income partly within and partly without under the stated rule
- Every sale abroad makes all manufacturing income foreign-source
- Every foreign customer makes every component Philippine-source
- The purchase-and-resale rule automatically erases the production rule
- Source is determined solely by a shipping label
Legal references
- NIRC RA8424, relevant provisions as amended: https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html Section42(A)(2),(4),(C)(4),(E).
- RA12214 CMEPA: https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html Section12, current Section42(A)(1) amendment checked.
- Aces Philippines v. CIR, GR226680, August30 2022 ENBANC MAIN: https://lawphil.net/judjuris/juri2022/aug2022/gr_226680_2022.html MAIN income-producing activity and Philippine gateway receipt.
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