BIR Ruling No. 084-61

March 24, 1961 BIR RULING NO. 084-61 Messrs. William H. Quasha & Associates Hongkong Bank Building 117 Juan Luna, Manila Gentlemen : This is with reference to your letter dated February 16, 1961 requesting information as to what taxes aside from income tax and documentary stamp tax should be paid by your client, the Chartered Bank, in its capacity as a Depository in the Philippines Depository Receipt System. cdtech Under the Deposit Agreement (Annex "B" of your letter) the Chartered Bank as the Depositary does not act for or as an agent of the Shell Company of the Philippines, Limited. As such Depositary, it has no interest whatsoever in the marketing of the Depositary Receipts or in the deposited securities, but act solely as a depositary, offering its services to facilitate the holding of and trading in such foreign shares by Filipinos. For the different services rendered, the Chartered Bank charges a fixed schedule of fees appearing on page 18 of the Deposit Agreement. It is understood that depositary bank does not purchase shares or certificate of stock for resale to resident of the Philippines. Under the above facts, your client, for the income derived under this System, is liable, in addition to the income tax and documentary stamp tax to be paid by it, to the payment of the 5% bank tax prescribed in Section 249 of the Tax Code and to the additional residence tax. If the Record Holder or owner of the Depositary Receipt is a non-resident alien individual or corporation, dividends must be subject to withholding tax even if the Depositary, The Chartered Bank, is licensed to do business in the Philippines. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue