BIR Ruling No. 017-83

February 10, 1983 BIR RULING NO. 017-83 Dear Sir : This refers to your letter dated October 19, 1982, requesting information as to the rate of tax to be withheld on the dividends to be remitted by you to East Asiatic Company Ltd., (EAC) in Copenhagen, Denmark. cdta It is represented that you are a domestic BOI registered and export oriented company; that EAC is a resident foreign corporation with head office in Copenhagen, Denmark; that EAC owns 2,833,600 shares or 40% of your total and outstanding 7,084,000 shares. In reply, please be informed that said dividends having been received by a resident corporation from a domestic corporation, are subject to a final tax of 10% on the total amount thereof imposed by Section 24(c) of the Tax Code, which shall be collected and paid as provided in Sections 53 and 54 of same Code. The said dividends remitted to the head office of EAC not being effectively connected with the conduct of EAC's trade or business in the Philippines are not considered branch profits; hence they are not subject to the branch profit remittance tax imposed by Section 24 (b)(2)(ii) of the Tax Code. The reduced tax on dividends under the RP-Denmark Tax Treaty is not applicable in this case. Investigation shows that you are not engaged in any of the preferred areas of investment enumerated in Art. VI of the said tax treaty. Since you merely kiln dry lumber, you are not engaged in the business of manufacturing necessary articles out of Philippine woods which is the requirement for entitlement of the treaty benefit. cdti Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue