Taxability of Film Rentals/Royalties Derived from the Use of Motion Picture Films or Films or Tapes for Radio/TV Broadcasting

May 16, 1985 BIR RULING NO. 072-85 37-a 010-85 072-85 Gentlemen : This refers to your letter dated March 12, 1985 requesting a ruling confirming that film rentals or royalties derived by Silverbach-Lazarus Group from the use of motion picture films or films or tapes for radio or television broadcasting are subject to a tax of 10% of the gross amount of such film rentals or royalties pursuant to Art. 13(2)(b)(iii) of the RP-US Tax Convention. cdti It is represented that the Silverbach-Lazarus Group is a non-resident foreign corporation organized and existing under and by virtue of the laws of the State of California, U.S.A.; that it is engaged in the business of film distribution; and that on November 28, 1984 it entered into license contract with Greater Manila Area Radio TV Arts (Channel 7) for the telecast of certain films specified therein in consideration for the payment of US$2,500.00 as royalties or rentals. In reply, please be informed that the most-favored-nation clause under sub-paragraph (iii) of Article 13 (Royalties) of the RP-US tax treaty in relation to the RP-Sweden tax treaty [Art. VIII(1)] and RP-Denmark tax treaty [Art. IX(1)] is applicable in this case. Wherefore, it is confirmed that the film rentals or royalties in the amount of US$2,500.00 derived by your client, the Silverbach-Lazarus Group from Greater Manila Area Radio TV Arts (Channel 7) for the use of motion picture films or films or tapes for radio or television broadcasting pursuant to the license contract entered into by the said parties on November 28, 1984, are subject to a tax of 10% of the gross amount thereof in accordance to Art. 13(2)(b)(iii) of the RP-US tax treaty in relation to RP-Sweden and RP-Denmark tax treaties. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner