On Aug. 19, 2013, the Supreme Court (SC) decided in the case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue (G.R. No. 188550) and made the emphasis that the BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. The SC was referring to the BIR requirement to file a tax treaty relief application (TTRA) within a specified period to avail of the treaty rates.
Another income tax filing season is over and the post-filing period is an opportune time to do housekeeping on accounting documents and records. Also, this gives us breathing room for updates on the latest tax issuances of the Bureau of Internal Revenue (BIR). One issuance that caught my attention recently is the BIR’s Revenue Memorandum Order No. (RMO) 8-2017 which will take effect on June 26, 2017. This amended the previous RMO (72-2010), which prescribes the guidelines and processes for tax treaty relief applications (TTRA). Compliance with the previous RMO was challenging to most taxpayers as it requires filing the TTRA and supporting documents with the BIR before the transaction (i.e. first taxable event). Under the RMO, failure to file the TTRA prevents taxpayers from claiming relief under the tax treaty.
(Second of two parts)In last week’s article, we discussed the revised procedure to avail of tax treaty benefits for dividend, interest, and royalty payments under Revenue Memorandum Order (RMO) No. 8-2017. Under the amended rules, a tax treaty relief application (TTRA) is no longer required and withholding agents can automatically apply the preferential tax treatment — lower tax rate or exemption — on such payments upon receiving the Certificate of Residence for Tax Treaty Relief (CORTT) Form from the non-resident.