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Philippine Bar review · Question

Practice question: Situs of Income Taxation

Multiple Choice Medium

Practice question

An employee performs all the compensated work in Cebu but receives salary through a foreign bank. No treaty issue is presented. Is the salary foreign-source solely because payment goes abroad?
  1. Yes, because bank location always controls.
  2. Yes, because a foreign bank cannot receive Philippine-source income.
  3. Yes, if the employer uses dollars.
  4. No. The stated services are performed in the Philippines.
  5. No, because all services everywhere are Philippine-source.

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

Answer this question in flashcards to review your response and continue practicing.