BIR Ruling No. 154-83

September 5, 1983 BIR RULING NO. 154-83 Gentlemen : This refers to your letter dated December 13, 1982 requesting confirmation from this Office that the tax rate applicable to the royalty fees for technical assistance you will pay Barber Hydraulic Turbine, a Canadian firm is 25% under the RP-Canada Tax Treaty. It is represented that on December 16, 1982, you entered into a Licensing and Technical Services Agreement with Barber Hydraulic Turbine, Division of Marsh Engineering Limited (BHT), a non-resident company incorporated under the laws of Ontario, with head office at Port Colborne, Ontario, Canada, whereby BHT shall provide you with technical information and know-how for the design, manufacture and sale of hydraulic turbines in the Philippines; and that you will pay remunerations consisting of charges for manufacturing drawings and a royalty fee of 2% of the net selling price of all Hydraulic Turbines it manufactures and sells. (See Article 7 of Agreement) In reply, please be informed that under par. 3, Article XII of the RP-Canada Tax Treaty, the term "royalties" as used therein means payments of any kind received as a consideration for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. Accordingly, under the foregoing facts, the remunerations being paid by you are considered royalties. Pursuant to par. 2(b)(i) or Article XII (Royalties) of the RP-Canada Tax Treaty, the gross amount of the royalties are subject to 25% withholding tax. cd Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue