Article 5(Permanent Establishment)), Similarly, if the individual is

present in the other Contracting State for a period or periods aggregating 90 days or more in the taxable year, he may be taxed by that State. Finally, if the gross remuneration derived in the taxable year from residents of the other Contracting State for the performance of per­ sonal services in an individual capacity in that other Contracting State exceeds $10, 000 or its equivalent in Philippine pesos that other Contract­ ing State may tax the income of that individual from the performance of those services. Since the $10, 000 is gros remuneration, it includes any expenses, such as airfare, borne on behalf of or reimbursed to the individual performing the personal services. Article 15 also provides that the competent authorities may specify in an exchange of letters that the $10,000 limitation will be increased if circumstances v.-arrant, i, e,, if infiation reduces the real value of $10,000, Oice increased. the limitation can be decreased by the competent authorities, but never to an amount less than $10,000.

Paragraph (3) makes clear that the other Contracting State referred to in paragraph (2) may impose its tax only on net income,

Under the saving clause of paragraph (3) of Article 6 {General Rules of Taxation), the other Contracting State may also tax any individual who is a citizen or resident of that other Contracting State without regarc! to this Article.

Personal services performed by an individual in an independent capacity are services performed for his own account where he receives the income and bears the losses arising from such services. If an individual is an independent contractor, he Is considered to perform personal services in an independent capacity, Income from services in which capital is a material income-producing factor, however, will

generally be governed by the provisions of Article 7 (Business Pro!its). Generally, the term "personal services in an independent capacity" includes, but is not limited to, services rendered as a director or a corporation or :rendered by physicians, lawyers, engineers, architects, dentists, and accountants performing personal services as sole pro­ prietors or partners, Services performed by employees, such as by an officer of a corporation, are dependent personal services to which A,;ticle 16 (Dependent Personal Services) applies.