ON March 15, 2024, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) 38-2024, clarifying its earlier pronouncements in RMC 5-2024 on the taxation of cross-border transactions.

To recall, in Aces Philippines Cellular Satellite Corp. v. Commissioner of Internal Revenue (GR 226680, Aug. 20, 2022), which involves payment of satellite airtime fees, the Supreme Court held that the airtime fees paid by a domestic company to a foreign company are Philippine-sourced income. This is because the income-generating activity takes place not during the act of transmission but only upon the receipt of gateways (which are located in the Philippines) of the call as routed by the satellite.