Practice question
A resident Philippine corporation issues an interest-bearing note. A foreign holder receives its interest in an overseas account and argues that offshore payment alone makes the yield foreign-source. Apply Section 42(A)(1), as amended by RA 12214, and confine the answer to source.
- Foreign-source solely because payment is offshore.
- Philippine-source; the amended provision includes interest or yield from interest-bearing obligations of residents.
- Foreign-source because notes can never produce Philippine-source interest.
- Exempt from all Philippine taxes because the holder is foreign.
- Philippine-source only if the physical note remains in Manila.
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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