BIR Ruling No. 356-2022

BUREAUOF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

Section 23 (F),42 (A) (3) and 108 of the National Internal Revenue Code of 1997, as amended; BIR Ruling No. OT-06-2020

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Online Loans Pilipinas Financing, Inc.

Pasig City Pearl Drive San Antonio 1402-1406 Tycoon Center

Attention: Adrian Paulo B. Roco President

Chief Financial Officer Marian I. Abarquez

Gentlemen:

Online Loans Pilipinas Financing, Inc. ("OLP") from the payment of withholding tax on payments for services rendered abroad in favor of eCloudvalley Technology (HK) Limited ("eCloudvalley"), a non-resident foreign corporation (NRFC). This refers to:your letter request for a confirmatory ruling on the exemption of

through the internet via web and mobile applications. under the laws of the Republic of the Philippines and offers financial services such as loans It is represented that OLP is.a domestic corporation duly organized and existing

business of consultancy and trading. Also, eCloudvalley is not registered as a corporation, partnership or one person corporation in the Philippines per its Certificate of Non- As stated in the NRFC's Apostilled Business Registration Certificate, it is engaged in the Registration from the Securities and Exchange Commission eCloudvalley, on the other hand, is a NRFC registered under the laws of Hongkong.

reseller and solution provider of Amazon Web Services, Inc ("AWS Company") - will provide a comprehensive suite of services and solutions to run sophisticated and scalable applications in order to help OLP achieve better run on AWS. For this purpose, OLP shall conditions in the Services Agreement. Web Services" Services Agreement. Under the said agreement, eCloudvalley - which is a make a monthly payment to eCloudvalley for the use of the AWS subject to the terms and On January 28, 2019, the above-mentioned corporations entered into an "Amazon

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office in Wanchai, Hongkong. It is further.represented, that all of the services:of eCloudvalley are performed in its

eCloudvalley is not subject to withholding tax. In this regard, you would like to confirm that the payment of service fees of OLP to

whether or not engaged in the trade or business in the Philippines, is subject to income tax only with.respect to income derived from sources in the Philippines. Code of 1997 (Tax Code), as amended, states that a foreign corporation like eCloudvalley. In reply, please be informed that Section 23(F) of the National Internal Revenue

Tax Code, as amended, this is considered derived in the Philippines only if the services are actually preformed in the Philippines, to wit: Concerning income from the provision of services, under Section 42 (A)(3) of the

"SEC. 42. : Income from Sources Within the Philippines.

L Within the Philippines: items.of gross income shall be treated as:gross income from sources (A) Gross Income from Sources Within the Rhilippines. - The following

XXX xX xxx

(3) Services. - Compensation for labor or:personal services performed in the Philippines: " (Underscoring and emphasis ours)

fees paid by OLP to eCloudvalley for these services shall be exempt from income tax pursuant to the aforequoted provisionst. Accordingly; since eCloudvalley performed the services in Hongkong the service

amended, provides that payments forthe sale or exchange of services, including the use or lease of properties are subject to VAT only if the services are performed in the Philippines, to wit: With respect to value-added tax (VAT), Section 108(A) of the Tax Code, as

Properties: "SEC. 108...Value-added Tax on Sale of Services and Use or Lease of

derived from the sale or exchange of services; including the use or lease of properties. a value-added tax equivalent to twelve percent (12%) of gross receipts (A) Rate and Base of Tax. - There shall be levied, assessed and collected.

The phrase: "sale or.exchange of services" means the performance of all kinds of services in the Philippines for others for a fee; remuneration or consideration... " (Underscoring and emphiasis ours)

1 BIR Ruling No. OT-006-20, dated January 20. 2020 PAGE 2 of 3

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the service fees paid therefor by OLP to the former are likewise exempt from VAT? Considering that the services performed by eCloudvalley are outside the Philippines.

service fees of OLP to eCloudvalley are not subject to withholding tax. In view of the foregoing exemptions from income tax and VAT, the payment of

investigation it shall be disclosed that the actuial facts are different, then this ruling shali be without force and effect insofar as the herein parties are concerned This ruling is issued on the basis of the facts as represented. However, if upon

Very truly yours,

K- Commissioner of Internal Revenue LILIA CATRIS GULLERMO thih b. Gull 000204

2 BIR Ruling No. OT-006-20, dated January 20. 2020 PAGE 3 of 3