25% Withholding Tax — Cash Dividends

April 8, 1981 BIR RULING NO. 070-81 24-b 000-00 070-81 The HongKong and Shanghai Banking Corporation 6780 Ayala Avenue Makati, Metro Manila Attention: Mr . A . R . Servinio Manager-Securities Gentlemen : This refers to your letters dated July 22, 31, August 14, September 26 and October 17, 1980 requesting confirmation of your opinion to the effect that cash dividends derived by non-resident companies based in the United Kingdom on their investments in Philippine securities are subject to the 25% withholding tax prescribed under the RP-UK Tax Treaty. casia It is represented that your clients, Samuel Montagu & Company Ltd., Midland Bank Limited Account Gartmore Far Eastern Trust Ltd., J. Henry Schroder Wagg & Co. Ltd., Lloyds Bank Limited Sub-Account 60 (Endeavour Fund), Lloyds Bank Limited Sub-Accounts: 8-GT Far East and General Fund, 62-Anthony Gibbs Far East and General Trust 97-GT International Fund, 74-Bridge International Unit Trust and MG 12-M and G Far Eastern and General Fund are non-resident companies based in the United Kingdom; and that said companies derived cash dividends from their investments in Philippine securities. In reply thereto, I have the honor to inform you that Section 1(a) and (b), Article 9 of the RP-UK Tax Treaty provides as follows: "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; and acd (b) in all other cases, 25% of the gross amount of the dividends". Such being the case, the cash dividends derived by your abovementioned clients who are resident of the United Kingdom from their investments in Philippine securities are subject only to 25% withholding tax on the gross amount of the said dividends. Very truly yours, RUBEN B. ANCHETA Acting Commissioner