BIR Ruling No. 128-84

July 31, 1984 BIR RULING NO. 128-84 37-a-000-00-128-84 Gentlemen : This refers to your letter dated March 22, 1984 requesting that the film rentals due Warner Bros. International be subject only to the 10% Philippine withholding tax pursuant to the provisions of the RP-US Tax Treaty, in relation to the RP-Sweden and RP- Denmark tax treaties. It is represented that Warner Bros. (F.E.), Inc. Philippine branch (Formerly Warner Bros. First National Pictures, Inc. and Warner Bros. Seven Arts (F.E.), Inc.) entered into a film distribution agreement on September 1, 1963 (which was later amended on June 27, 1974 and March 26, 1979) with Warner Bros. International, a division of Warner Bros. Inc., a non-resident US corporation whereby Warner Bros. (F.E.), Inc. will act as the exclusive distributor in the Philippines of motion picture films of Warner Bros. International, for and in consideration of the 60% of the monthly billings to theaters less expenses as film rentals. In reply thereto, please be informed that under the RP-US Tax Treaty the tax on royalties is 25% (Article 13, 2(b)(i) but with the most-favored-nation treatment under Article 13(2)(b)(iii) of the said treaty. Considering that under the RP-Sweden Tax Treaty (Article VIII, par. 1) and RP-Denmark Tax Treaty (Article IX par. 1) Swedish and Danish residents are subject to 10% tax on rentals or other amounts paid as a consideration for the use, or the right to use, motion picture films, the same reduced rate is also extended to American residents. In view hereof, royalties paid by the Warner Bros. (F.E.), Inc. Philippine branch to Warner Bros. International of New York City, U.S.A. for its use of motion picture films in accordance with the aforecited agreement between them, shall be subject to 10% withholding tax pursuant to the provisions of the RP-US Tax Treaty, in relation to the RP-Sweden and RP-Denmark tax treaties. iatdc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner