Taxation, 2011 Bar — Question 14

MULTIPLE CHOICE

Aplets Corporation is registered under the laws of the Virgin Islands. It has extensive operations in Southeast Asia. In the Philippines, its products are imported and sold at a mark-up by its exclusive distributor, Kim's Trading, Inc. The BIR compiled a record of all the imports of Kim from Aplets and imposed a tax on Aplets' net income derived from its exports to Kim. Is the BIR correct? (A) Yes. Aplets is a non-resident foreign corporation engaged in trade or business in the Philippines. (B) No. The tax should have been computed on the basis of gross revenues and not net income. (C) No. Aplets is a non-resident foreign corporation not engaged in trade or business in the Philippines. (D) Yes. Aplets is doing business in the Philippines through its exclusive distributor Kim's Trading, Inc.

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