Philippines Bureau of Internal Revenue simplified the procedure for claiming tax treaty benefits for dividend, interest and royalty income of non-resident income earners through Revenue Memorandum Order 8-2017.
Following the lead of President
Rodrigo Duterte in making government services more effective and
efficient, the Philippine Bureau of Internal Revenue simplified the
procedure for claiming tax treaty benefits for dividend, interest
and royalty income of non-resident income earners.
Before, the procedure for claiming tax treaty benefits for
dividend, interest, and royalty income – as set on
Revenue
Memorandum Order 72-2010 (RMO 72-2010) - required
the submission of many documents; one set of general documents
(e.g. proof of residency and articles of incorporation, among
others), and a set of documents specific to dividend income,
interest and royalty. Last March, the Bureau amended the procedure
through the Revenue Memorandum Order 8-2017 (RMO
8-2017).
The new procedure
The RMO 8-2017 makes life
easier for non-resident corporations earning dividend, interest and
royalty income sourced from the Philippines, by setting a simpler
process that involves less documents.
As described in the Memorandum, the changes include the creation of
a new Certificate of Residence for Tax Treaty Relief (CORTT) Form -
which must be submitted by non-residents instead of the old
mandatory tax treaty relief applications (TTRA) – and the
enhancement of BIR Forms 1601-F and 1604-CF, used to disclose the
income derived from non-residents. Also, the procedure
requires a compliance check of the tax treaty relief provision
and the tax obligations of the withholding agent/income payer, and
a post-reporting validation of the final withholding tax payments
on income of the non-residents deriving dividends, interest and
royalty income in the Philippines.
If non-residents fail to submit a CORTT Form to the withholding
agent/income payer, it will mean that there is no interest in
claiming any tax treaty relief and the income will be subject to
the normal rate provided under the Tax Code.
This more streamlined procedure not only makes the process of
availing preferential tax treaty rates of dividends, interest and
royalty income a much more bearable exercise, but it means the
Philippines is giving a step towards reducing red tape.
Our experts are optimistic that these changes will spread to other
aspects of tax administrative regulations.
Interested in finding out more? Go to
www.tmf-group.com/enquiry to make an enquiry.
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