Availment of Preferential Tax Treaty Rate of 25% on Dividends Paid to a Resident of the United Kingdom

February 5, 1997 BIR RULING NO. 013-97 28 (b) (6) 000-00 013-97 Ker and Co., Ltd. Ker Building Conde De Gamazo, Romualdez Manila Attention: Mr . Jean Pierre C . Zialcita President Gentlemen : This refers to your letter dated February 9, 1996 requesting for the renewal of the authority previously granted by this Office relative to the availment of the preferential tax treaty rate of 25% on dividends paid to Mrs. Patricia G. Wilson, a resident of the United Kingdom, pursuant to Article 9(1)(b) if the RP-UK Tax Treaty. cdti It is represented that Mrs. Patricia G. Wilson, a British citizen and a resident of United Kingdom at Drumlochy House, Milton of Drumlochy, Blairgowrie, Pertshire, United Kingdom, is a stockholder of Ker & Co., Ltd.; that she owns 15,798 total number of shares of stock of the said company (54 Preferred shares and 15,744 Ordinary shares) with a total par value of P84,120.00; that on December 7, 1995, the Board of Directors of Ker & Co., Ltd. unanimously resolved to pay on January 18, 1996 the 5% dividend on the Preferred shares for the fiscal year ended 30th September 1995 to stockholders of record at 22nd December 1995; and to declare a final cash dividend on the Ordinary shares of 15% for the fiscal year ended 30th September 1995 payable to stockholders of record at 22nd December 1995, i.e., 7.5% on January 18, 1996 and 7.5% on February 15, 1996, the payment in two parts being decided upon to ensure no impairment of funds required by the company as working capital; that the company credited to Mrs. Patricia G. Wilson's account in its books a total dividends of P12,078.00; and that in support of your request, you submitted the following documents: (1) BIR Form No. TC-001 duly accomplished in triplicate; and (2) Photocopy of the Inland Revenue Office dated 23rd March 1992 confirming Mrs. Patricia G. Wilson's permanent residency in the United Kingdom. In reply, please be informed that pursuant to Article 9(1)(b) of the RP-UK Tax Treaty reading: "Article 9 "DIVIDENDS "(1) Dividends derived from a company which is a resident of the Philippines by a resident of the United Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in the Philippines but where such dividends are beneficially owned by a resident of the United Kingdom the tax so charged shall not exceed: "(a) 15% of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends; "(b) in all other cases, 25% of the gross amount of the dividends." xxx xxx xxx the dividend income of residents of United Kingdom derived from the Philippines is subject to the preferential tax rate of 25%. Such being the case, your request for the renewal of your previous authority to avail of the preferential tax treaty rate of 25% on the dividend under consideration is hereby granted. The said tax should be withheld by you before actual remittance of the dividend to Mrs. Patricia G. Wilson of the United Kingdom. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue