September 24, 2004

BIR RULING [DA-501-04]

C.L. Manabat & Co.

3rd to 6th Floor, Salamin Building
197 Salcedo Street, Legaspi Village
Makati City

Attention: Mr. Richard R. Lapres

Manager
Tax and Legal Department

Gentlemen :

This refers to your letter dated August 5, 2004 stating that your client, Mynd
International Ltd. (the Company), formerly known as Policy Management Systems
Corporation Limited, is a Foreign corporation organized and existing under the laws
of the State of Delaware, USA; that it is licensed to transact business in the
Philippines by operating a branch office on April 5, 1999 with the Securities and
Exchange Commission (SEC) with SEC License No. A199815698 with principal
office address at the 11th Floor Pacific Star Building, Sen. Gil Puyat Avenue, Makati
City; that its primary purpose is to provide installation, maintenance, design,
assembling and support services of computer software, and import/export of computer
peripherals in the capacity of either as an agent, trading company, computer service
provider or manufacturer; to analyze and design computer programs, to design,
import/export installation, service and maintenance of automating machinery and
robots required for surveying computer software; that on November 5, 2001, the
Company has changed its corporate name from Mynd International, Ltd. to Mynd
International, Ltd. (Philippine Branch) doing business under the name and style of
CSC International Holdings, Inc.; and that the Company in the ordinary conduct or in
the active pursuit and performance of its primary purpose normally grants its local
customers (end-users) a personal, non-transferable, non-assignable and non-exclusive
license for the use of the software, which continues until terminated pursuant to the
terms and conditions as stipulated by the Company and its customers.
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 In connection therewith, you now request confirmation of your opinion that
income payments made to Mynd International Ltd. (Philippine Branch), doing
business under the name and style of CSC International Holdings, Inc. for the use of
or right to use software products and the rendition of the related support and
maintenance services to local end-users are considered ordinary business income
subject to the 32% regular corporate income tax under Section 27(A) of the Tax Code
of 1997 and to the 2% creditable withholding tax at source.

In reply thereto, please be informed that in BIR Ruling No. DA351-03 dated
October 10, 2003, which was later reiterated in BIR Ruling No. DA518-03 dated
December 16, 2003, this Office ruled that

". . . to be subject to the 20% final withholding tax, the royalties must be
in the nature of passive income. Thus, if the income is generated in the active
pursuit and performance of the corporation's primary purpose, the same is not
passive income but ordinary business income subject to the regular corporate
income tax.

"In the instant case, the income derived by MISNet from the distribution
of the licensed software programs/products to its clients, and the provision of
technical services, is income generated in the active pursuit and performance of
its primary purpose, therefore, it is clearly not a passive income subject to the
20% final tax. Such being the case, your opinion that the payments received by
MISNet from the active conduct of trade or business is considered business
income subject to the 32% regular corporate income tax is hereby confirmed."

IN VIEW OF THE FOREGOING, since the income payments made to Mynd

International Ltd. (Philippine Branch) for the use of or the right to use its software
products is in all fours similar to the above-cited cases, this Office holds that the
income derived therefrom is considered as ordinary business income subject to the
32% corporate income tax imposed under Section 27(A) of the Tax Code of 1997 and
consequently to the 2% creditable withholding tax prescribed in Revenue Regulations
No. 2-98, as amended by Revenue Regulations No. 14-2002. IaEASH

This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then
this ruling shall be considered null and void.

Very truly yours,

Copyright 1994-2017 CD Technologies Asia, Inc. Taxation 2017 Second Release 2

 (SGD.) JOSE MARIO C. BUAG
Deputy Commissioner
Legal & Inspection Group

Copyright 1994-2017 CD Technologies Asia, Inc. Taxation 2017 Second Release 3