BIR Ruling [DA-090-97]

March 18, 1997 BIR RULING [DA-090-97] Mitsuwa Philippines, Inc. 20/F Metro Bank Plaza Bldg. Sen. Gil Puyat Avenue 1200 Makati City Attention: Mr . Teruo Takasaka President Gentlemen : This refers to BIR Ruling No. DA-4235-96 dated November 21, 1996 wherein this Office ruled that your remittances of royalty payments in favor of Mitsuwa Chemical Co., Ltd. of Japan is subject only to the preferential rate of 25% Philippine income/withholding tax pursuant to Article 12 of the RP-Japan Tax Treaty. By way of supplement, please be informed that the said royalty payments to be made by you to Mitsuwa Chemical Co., Ltd. of Japan for the grant of license to use the Technology and acquire Technological Information for the manufacture and assembly of plastic parts shall be subject to the 10% value-added tax imposed under Section 102(a)(2) in relation to Section 99 of the Tax Code, as amended by R.A. No. 7716, based on the contract price agreed upon by the parties. Being the licensee, you shall be responsible for the payment of VAT on such royalties in behalf of Mitsuwa Chemical Co., Ltd. of Japan by filing a separate VAT declaration/return. The said VAT declaration/return can be used by you as evidence in claiming input tax credit. [Sec. 4.102-1(b), Revenue Regulations No. 7-95 as amplified by Revenue Memorandum Circular No. 23-96; see also BIR Ruling No. 049-96 dated April 11, 1996] cdtech Please be guided accordingly. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)