Practice question
A taxpayer leases a building located in Japan. Rent is paid into a Manila bank account. Apply only Section 42's source rule, without deciding whether the taxpayer's classification makes the foreign income taxable.
- Philippine-source because the receiving bank is in Manila.
- Philippine-source because every rental is domestic.
- Philippine-source if the lease is written in English.
- Tax-exempt for every taxpayer regardless of residence.
- Foreign-source because the rented property is outside the Philippines.
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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