BIR Ruling No. 149-83

August 25, 1983 BIR RULING NO. 149-83 Gentlemen : This refers to your letter of June 10, 1983 requesting confirmation that the technical service and royalty payments you are remitting to Fuller O'Brien Corporation of California U.S.A. are taxable only at 25% in accordance with the provisions of RP-US Tax Treaty. It is represented that pursuant to technical services and royalty trademark agreement entered into on October 1, 1982 by your company and Fuller O'Brien Corporation, a non-resident foreign corporation with principal office at 450 East Grand Avenue, South San Francisco, California, you shall be supplied by the latter technological aid and assistance for use by you in connection with the preparation, manufacture and marketing of certain products; and that in consideration thereof, you shall pay to the said Fuller O'Brien Corporation technical service fee equal to 3% of the net sales of the products manufactured and sold by your company. (Par. 7 of the Agreement). In reply, please be informed that under par. (3), Article 13 of the RP-US Tax Treaty, the term "royalties" as used therein means payments of any kind received in consideration for the use of, or the right to use any patent, trademark, design or model, plan, secret formula or process of other like right or property, or for information concerning industrial, commercial or scientific experience. Accordingly, under the foregoing facts, the technical service fee is considered as royalty. Pursuant to Article 13, (2)(b) of the RP-US Tax Treaty, the gross amount of said property is subject to the 25% withholding tax after January 1, 1983 when the RP-US Tax Treaty took effect. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue