28 June 2016 Philippines grants automatic treaty rates on dividend, interest and royalty payments to nonresidents The Philippines Bureau of Internal Revenue issued Revenue Memorandum Order (RMO) 27-16 on June 23, granting automatic reduced treaty rates on dividends, interest and royalty payments to nonresidents, effective immediately. In lieu of the mandatory tax treaty relief application, RMO 27-16 requires a withholding agent to complete BIR Forms 1601-F (monthly) and 1604-CF (annual information return). In addition, the withholding agent must substantiate the applicable treaty rate in the event of an audit/investigation RMO 27-16 requires a separate application with the BIR on the reduced 15% rate on inter-corporate dividends (tax sparing rule). It also contains noncompliance penalties imposed on the withholding agents for failure to timely file and pay the reduced taxes. A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details. Document ID: 2016-1120 |
