Taxation, 2013 Bar — Question VII

QUESTION

XYZ Law Offices, a law partnership in the Philippines and a VAT-registered taxpayer, received a query by e-mail from Gainsburg Corporation, a corporation organized under the laws of Delaware, but the e-mail came from California where Gainsburg has an office. Gainsburg has no office in the Philippines and does no business in the Philippines. XYZ Law Offices rendered its opinion on the query and billed Gainsburg US$1,000 for the opinion. Gainsburg remitted its payment through Citibank which converted the remitted US$1,000 to pesos and deposited the converted amount in the XYZ Law Offices account. What are the tax implications of the payment to XYZ Law Offices in terms of VAT and income taxes? (7%)

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