BIR Prescribes New Procedure for Claiming Tax Treaty Benefits for Dividend, Interest, and Royalty Income

June 13, 2017

On March 28, 2017, the Commissioner of Internal Revenue issued Revenue Memorandum Order No. 8-2017 dated October 24, 2016 (RMO 8-2017), which takes effect 90 days after signing.

RMO 8-2017 amends Revenue Memorandum Order No. 72-2010 (RMO 72-2010) by providing for new procedures in claiming preferential tax treaty benefits on dividend, interest, and royalty income of nonresidents, following a system of self-assessment and automatic withholding of taxes subject to post-reporting validation, in lieu of obtaining a tax treaty relief application (TTRA) ruling under RMO 72-2010. RMO 72-2010 continues to apply to income other than dividends, interest, and royalties, i.e., the concerned nonresidents are still required to obtain TTRA rulings. The reduced tax rate of 15% applied to intercorporate dividends paid to nonresident foreign corporations under the tax-sparing provision of the National Internal Revenue of 1997, as amended will be covered by a separate issuance.

Read the rest of the bulletin. The bulletin was authored by SyCipLaw partner Carina C. Laforteza and senior associate Maria Viola B. Vista-Villaroman.

Carina C. Laforteza is a lawyer and a certified public accountant with extensive tax and corporate practice. Her tax work ranges from tax structuring (including how investments are to be made into the Philippines and estate tax planning) to tax compliance (including assisting clients in audits by the Philippine Bureau of Internal Revenue) to tax litigation (including petitions questioning the legality of revenue issuances) and tax-related arbitration.

Maria Viola B. Vista-Villaroman advises clients in various corporate, employment and tax issues. She has considerable experience in setting up companies in the Philippines, conducting legal due diligence, and drafting and reviewing contracts and other documents relating to investments, acquisitions, and corporate restructuring of companies. She also represents companies before tax and labor tribunals.