Request for Relief from Double Taxation on Dividends Payment to Business Science Research Corporation

September 12, 1995 BIR RULING NO. 141-95 28 (b) (6) 000-00 141-95 Sycip, Salazar, Hernandez and Gatmaitan 105 Paseo de Roxas, 1200 Makati City, Metro Manila Attention: Atty Euney Marie J . Mata Gentlemen : This refers to your letter dated June 8, 1995 requesting in behalf of your client, Fintec Holdings, Inc., for a relief from double taxation on dividends payment to Business Science Research Corporation, with address at 750 Third Avenue, New York, New York, 10017, U.S.A. In support of your request, you submitted to this Office the following documents required under Revenue Memorandum Order No. 10-92, viz. 1. BIR Form No. TC-001; 2. Central Bank Registration of Business Science Research Corporation; 3. Certificate of the Corporate Secretary of Fintec Holdings, Inc. showing that Business Science Research Corporation was a stockholder of record of the former having in its name three million (3,000,000.00) shares in the aggregate amount of P3,000,000.00 as of May 10, 1995 representing 40% of the outstanding capital of Fintec Holdings, Inc. as of said date); cdpr 4. Certification of the Corporate Secretary of Fintec Holdings, Inc. attesting to the Resolution of the Board of Directors authorizing the payment of P16,302,895.00 in cash dividends in favor of the stockholders of record as of May 10, 1995; and 5. Articles of Incorporation of Fintec Holdings, Inc. and Financial Statements as of December 31, 1994. In reply, please be informed that the pertinent portion of Article II, paragraph (2)(b) of the RP-US Tax Treaty reads thus "ARTICLE II "DIVIDENDS" "(1) . . . "(2) The rate of the imposed by one of the Contracting States on dividends derived from sources within that Contracting State by a resident of the other Contracting State shall not exceed "(a) . . . "(b) When the recipients is a corporation 20% percent of the gross amount of the dividend if during the part of the paying corporation's taxable year which precedes the date of payment of the dividend and during the whole period of its prior taxable year (if any), at least 10% percent of the outstanding shares of the voting stock of the paying corporation was owned by the recipient corporation. "(c) . . . Accordingly, since 40% of the outstanding shares of the voting stock of FINTEC HOLDINGS, INC. was owned by Business Science Research Corporation as of May 10, 1994, the amount of P6,521,138.00 to be paid to the latter as dividends shall be subject to the preferential rate of 20% which shall be withheld before actual remittance thereof. llcd Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue