Application and claims under the tax treaties.

If a nonresident has income source in the Philippines and is a resident in another country, it
may be liable to pay tax in both countries under their tax laws. To avoid 'Double Taxation'
(DT) in this situation, the Philippines has negotiated DT treaties with 39 countries. A
nonresident in another country with which the Philippines has a DT treaty may be able to
claim exemption or partial relief from the Philippines tax on certain types of income from
Philippines sources. The precise conditions of exemption or relief can be found in the text of
the relevant treaty.

Below is a guide that will give you an overview of Double Taxation Relief claims, mainly
by nonresident with Philippine income sources - who can claim and how to claim, and the
types of income covered by the treaties.

 Who can apply for Tax Treaty Relief Application (TTRA)?

Non-resident Individuals and Non-resident Corporations or their duly authorized

representative who are income recipients from the Philippines and whose country of
residents has an effective tax treaty with the Philippines.

 What are the type of Philippine income maybe subject of preferential tax rate/and or tax exempt
under the DT treaty?

a. Preferential tax rates:

Dividends, Interest, Royalties and Shipping and Air Transport.

b. Tax Exempt:

Depending on the provisions of the DTA, you may claim the benefits of an exemption
from the tax on income for personal services, teachers, researchers, artistes, athletes,
students, trainees, directors fees, pensions, government service, gains from the sales of
shares/alienation of property and independent personal services not rendered more than
183 days.

 Where to apply TTRA?

All tax treaty relief application shall only be submitted to and received by the International
Tax Affairs Division ("ITAD")

 Requirements for applying TTRA?

A non-resident individual or corporation must first secure Tax Identification Number for
TTRA from Revenue District Office No. 39 before filing the TTRA in ITAD.
 Duly accomplished TTRA BIR Forms 0901 (back to back) with the attachments prescribed
document under Revenue Memorandum Order No. 72-2010 or documents written at the
back portion of the BIR Form No. 0901.


o
 BIR Forms No. 0901-D
 BIR Forms No. 0901-I
 BIR Forms No. 0901-R
 BIR Forms No. 0901-P
 BIR Forms No. 0901-S
 BIR Forms No. 0901-O
 BIR Forms No. 0901-C
 BIR Forms No. 0901-T

Procedure for Claiming Tax Treaty Benefits for

Dividend, Interest and Royalty Income of Non-
resident Income Earners
Tax Alert No. 24 [Revenue Memorandum Order No. 27-2016 dated 23 June 2016]

24 June 2016

The Commissioner of Internal Revenue (CIR) has issued Revenue Memorandum Order No.
27-2016 dated 23 June 2016 (the "Order") to provide new procedures in claiming preferential
tax treaty benefits on dividend, interest and royalty income of non-residents sourced within the
Philippines pursuant to effective tax treaties, amending RMO No. 72-2010.

The Order provides the following guidelines and policies, among others:

1. In lieu of the mandatory tax treaty relief application (TTRA), preferential treaty rates for
dividends, interests and royalties are granted outright by withholding final taxes at applicable
treaty rates.
2. Withholding agents should file the appropriate BIR Form Nos. 1601-F and 1604-CF as
provided by existing regulations. Incomplete information provided on the form shall be a
ground for denial of availment of the preferential treaty rates and disallowance of the pertinent
expense/s of the withholding agent.
3. Applications for ruling under Section 28(B)(5)(b) of the Tax Code for a preferential rate of 15%
on intercorporate dividends paid to a non-resident foreign corporation (NRFC) shall apply to
the NRFC which country of residence/domicile:
o Has no effective tax treaty with the Philippines;
o Has a worldwide system of taxation; and
o Allows credit against the tax due from the NRFC dividend taxes deemed to have been paid in the
Philippines equivalent to 15%.
4. In the availment of preferential treaty rates, duly accomplished BIR Form Nos. 1601-F and
1604-CF should be timely filed before the appropriate revenue district office where the
 domestic withholding agents of non-residents are registered. Payment of pertinent final taxes
due shall be made to an authorized agent bank.
5. In the event of an audit investigation, this Order provides a list of supporting documents
withholding agents should keep for substantiation of the claim for preferential treaty rates.
6. In availing of the reduced rate of 15% on intercorporate dividends received by an NRFC under
Section 28(B)(5)(b) of the Tax Code, the NRFC shall file a separate application with the BIR-
ITAD with supporting documents provided under this Order.
7. Any violation of the provisions of this Order shall be subject to penalties provided in Section
250 and other pertinent provisions of the Tax Code.
8. For income other than dividends, interest and royalties, the provisions contained in and
procedures required in RMO No. 72-2010 shall continue to apply, and obtaining a ruling shall
still be required.
9. All applications for preferential treaty rates on dividends, interest and royalties already filed
before the ITAD prior to the effectivity of this Order shall still be processed and the
corresponding ruling shall be issued.

This Order takes effect immediately.

You may access the full version of this Order through the BIR website.

Tax publications
 Tax Alerts
 Taxwise or Otherwise
 Client Advisory Letter
 Tax calendar
 National Internal Revenue Code of 1997
 Tax handbooks

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Contacts

Ma. Teresa Ledesma

Tax Director
Tel: +63 (2) 845 2728 Ext. 2125

Email