Technical Service Fees Considered Royalties under the Tax Treaty between the Philippines and Canada subject to 25% Withholding Tax

July 23, 1980 BIR RULING NO. 100-80 Mar Fishing Company, Inc. Suite 205 V. Madrigal Bldg. 6793 Ayala Avenue, Makati Metro Manila Attention: Ms . M . R . Jimenez Consultant Gentlemen : This refers to your letter dated June 30, 1980 requesting a ruling as to whether or not the technical service fees to be remitted by you to British Columbia Packers Limited of Canada for services rendered in your favor outside the Philippines for the period from April 1, 1976 to March 30, 1979, are subject to the 25% withholding tax, pursuant to the Convention between Canada and the Philippines for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income dated March 11, 1976. In reply thereto, I have the honor to inform you that under the pertinent provisions of Article XII of the Tax Treaty between the Philippines and Canada, such fees are considered as royalties. (See also BIR Ruling No. 064-80 dated May 26, 1980) In view thereof, and considering that the technical service fees (royalties) were deemed to arrive in the Philippines, the payor being a Philippine resident, the same are subject to 25% withholding tax under the aforesaid Tax Treaty between the Philippines and Canada beginning January 1, 1977 when the said treaty became operative. Very truly yours, RUBEN B. ANCHETA Acting Commissioner