Practice question
A nonresident sells shares issued by a domestic Philippine corporation under a contract signed abroad. Both payment and certificate delivery occur abroad. It argues that these facts necessarily make the gain foreign-source. Resolve only source under Section 42(E), without deciding treaty relief or the applicable tax rate.
- The gain is Philippine-source under the express domestic-corporation share rule.
- The gain is necessarily foreign-source because the contract was signed abroad.
- The gain is necessarily foreign-source because payment was abroad.
- The seller's nonresidence removes the statutory source rule.
- Every foreign buyer's purchase creates a Philippine tax exemption.
Legal references
- NIRC, Section 42(A), (C) and (E); https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
- RA 12214, Section 12 (amending Section 42(A)(1)); https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html
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