Request for Tax Treaty Relief Thru a Preferential Tax Rate of Ten Percent (10%) to be Withheld on Dividend Remittance to Marubeni Corporation of Japan and the Japan International Development Organization, Ltd. (JAIDO) in Accordance with the Provisions of the RP-Japan Tax Treaty

October 25, 1995 BIR RULING NO. 174-95 20 (b) (6) 000-00 174-95 First Cavite Industrial Estate 3rd. Flr., Producers Bank Building 371 Sen. Gil J. Puyat Ave. Makati, Metro Manila Attention: Mr . Edilberto R . Rebato, Jr . Finance and Admin Manager Gentlemen : This refers to your letter dated June 7, 1995 requesting for a tax treaty relief thru a preferential tax rate of ten percent (10%) to be withheld on your dividend remittance to Marubeni Corporation of Japan and the Japan International Development Organization, Ltd. (JAIDO) in accordance with the provisions of the RP-Japan Tax Treaty. llcd It is represented that Marubeni Corporation and JAIDO own 32% and 8% respectively of the total paid-up capital of P185,301,000.00 of First Cavite Industrial Estate (FCIE); that the state-owned National Development Company owns the other 60%; that FCIE is registered with the Board of Investments (BOI); that last February, FCIE declared 15% cash dividend to all stockholders on record as of December 31, 1994; and that you paid already the dividend to your Filipino stockholder, but you have not yet remitted the dividend to Marubeni Corporation and JAIDO owing to the appropriate withholding tax on the outward remittance of dividend to Japan. In reply, please be informed that under Article 10 of the RP-Japan Tax Treaty, pertinent portions of which read thus "(1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State. "(2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed: "(a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25 per cent either of the voting shares of the company paying the dividends or of the total shares issued by that company during the period of six months immediately preceding the date of payment of the dividends; "(b) 25 per cent of the gross amount of the dividends in all other cases. "The provisions of this paragraphs shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. "(3) Notwithstanding of this provisions of paragraph (2), the amount of tax imposed by the Philippines on the dividends paid by a company, being a resident of the Philippines, registered with the Board of Investments and engaged in preferred pioneer areas of investment under the investment incentives laws of the Philippines to a resident of Japan, who is the beneficial owner of the dividends, shall not exceed 10 per cent of the gross amount of the dividends. "(4) The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate right assimilated to income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident. cdll xxx xxx xxx the preferential tax rate to be withheld on your dividend remittance to Marubeni Corporation of Japan and JAIDO is ten percent (10%) considering that you are registered with the BOI in preferred areas of investments in accordance with the aforequoted provisions. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue