Additional Tax to be Imposed on Branch Profit Remitted to Ana Enterprises, Ltd., the Head Office in Japan Should Not Exceed 10 Percent of the Amount of the Part of such Earnings Remitted Abroad

January 30, 1995 BIR RULING NO. 013-95 25 000-00 013-95 Ana Hotels International Ana Enterprises, Ltd. Phil. Branch c/o Century Park Sheraton Manila Pablo Ocampo, Sr. Street, Malate Manila Attention: Sho Suzuki General Manager Gentlemen : This refers to your letter dated March 3, 1994 requesting confirmation of your opinion that your branch profit remitted to your head office in Japan, Ana Enterprises, Ltd., are subject to 10% tax only as provided for under the RP-Japan Tax Treaty. llcd It is represented that Ana Enterprises, Ltd. is a company organized and existing under the laws of Japan; and that it has been authorized to establish a branch office in the Philippines to engage in the business of hotel operation, consultancy and management, particularly for 5-star hotels like the Century Park Sheraton Manila. In reply, please be informed that pertinent portion of the RP-Japan Tax Treaty reads thus "PROTOCOL xxx xxx xxx "5. Nothing in the convention shall be construed as preventing the Republic of the Philippines from imposing on the earnings (other than those derived form the operation of ships or aircraft in international traffic) of a company being a resident of Japan attributable to a permanent establishment which it has in the Republic of the Philippines, a tax in addition to the tax which would be chargeable on the income of a company being a resident of the Republic of the Philippines, provided that any additional tax so imposed shall not exceed 10 percent of the amount of the part of such earnings which is remitted abroad. For the purposes of this paragraph, the term "earnings" means the amount remaining after deducting from the profits attributable to a permanent establishment in the Republic of the Philippines in a year and years preceding that year all taxes other than the additional tax referred to in this paragraph, imposed on such profits by the Republic of the Philippines." (emphasis supplied) Accordingly, this Office is of the opinion as it hereby holds that the additional tax to be imposed on your branch profit remitted to Ana Enterprises, Ltd. your head office in Japan should not exceed 10 percent of the amount of the part of such earnings remitted abroad. This ruling is being issued on the basis of the forgoing facts as represented. However, if upon investigation, it will be disclosed that the facts area different, then this ruling shall be considered null and void. prcd Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue