BIR Ruling No. 141-83

August 2, 1983 BIR RULING NO. 141-83 Gentlemen : This refers to your letter dated June 23, 1983 requesting a certification from this Office that the initial disclosure fee which your company, Fuller Paint Mfg. Co. (Phil.) Inc. (FULPHIL) will remit to Napko Corporation of Houston, Texas, U.S.A. in accordance with clause 9.1.1. of the Technology Licensing Agreement is subject to 25% withholding tax. In reply, please be informed that it appearing from the evidence submitted that Napko Corporation and FULPHIL entered into a Technology Licensing Agreement on March 19, 1982 whereby for an initial disclosure fee of $10,000,00, Napko Corporation grants FULPHIL the right to use the know-how, technical assistance and information for the exclusive manufacture and sale of its Napko-branded industrial/marine paint products. Such disclosure fee is considered as a royalty payment under Art. 13(3) of the RP-US Tax Treaty and subject to tax at the rate of 25% under Art. 13(2)(b)(i) of the same treaty. This Office hereby certifies that the $10,000.00 initial disclosure fee which you will remit to Napko Corporation, Houston, Texas, U.S.A., after the effectivity of the RP-US Tax Treaty (January 1, 1983), is subject to withholding tax at the rate of 25%. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue