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The dividends received by Marubeni Corporation from Atlantic Gulf and Pacific Co.

are not income arising from the


business activity in which Marubeni Corporation (head office) is engaged. Accordingly, said dividends if remitted abroad
are not considered branch profits subject to Branch Profit Remittance Tax.
Facts:
Take Note: In this case, Marubeni Japan (head office) was the investor of AG andP Co. Manila, not the branch office of
Marubeni in Manila.
Marubeni Corporation is a Japanese corporation licensed to engage in business in the Philippines. When the profits on
Marubenis investments in Atlantic Gulf and Pacific Co. of Manila were declared, a 10% final dividend tax was withheld
from it, and another 15% profit remittance tax based on the remittable amount after the final 10% withholding tax were
paid to the Bureau of Internal Revenue. Marubeni Corp. now claims for a refund or tax credit for the amount which it
has allegedly overpaid the BIR.

Issues and Ruling:
1. Whether or not the dividends Marubeni Corporation received from Atlantic Gulf and Pacific Co. are effectively
connected with its conduct or business in the Philippines as to be considered branch profits subject to 15% profit
remittance tax imposed under Section 24(b)(2) of the National Internal Revenue Code.
NO. Pursuant to Section 24(b)(2) of the Tax Code, as amended, only profits remitted abroad by a branch office to its
head office which are effectively connected with its trade or business in the Philippines are subject to the 15% profit
remittance tax. The dividends received by Marubeni Corporation from Atlantic Gulf and Pacific Co. are not income
arising from the business activity in which Marubeni Corporation is engaged. Accordingly, said dividends if remitted
abroad are not considered branch profits for purposes of the 15% profit remittance tax imposed by Section 24(b)(2) of
the Tax Code, as amended.
2. Whether Marubeni Corporation is a resident or non-resident foreign corporation.
Marubeni Corporation is a non-resident foreign corporation, with respect to the transaction. Marubeni Corporations
head office in Japan is a separate and distinct income taxpayer from the branch in the Philippines. The investment on
Atlantic Gulf and Pacific Co. was made for purposes peculiarly germane to the conduct of the corporate affairs of
Marubeni Corporation in Japan, but certainly not of the branch in the Philippines.

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