Tax Base of the 15% Branch Profit Remittance Tax is the Amount Actually Applied for by the Branch with the Central Bank as Profit to be Remitted Abroad

July 17, 1987 BIR RULING NO. 212-87 25-a 000-00 212-87 Gentlemen : This refers to your letter dated April 28, 1987 requesting a ruling as to the proper tax base of the 15% final profit remittance tax. You also requested the refund of the amount of P113,741.19 as alleged overpayment of the profit remittance tax. In reply, please be informed that "any profit remitted by a branch to its head office shall be subject to a tax of 15% . . ., the tax to be collected and paid in the same manner as provided in Sections 51 and 52 of this Code. . .". [Sec. 25 (a)(5), Tax Code, as amended by Executive Order No. 37] In line with this provision of law, this Office, in answer to your question, hereby holds that the tax base of the 15% branch profit remittance tax is the amount actually applied for by the branch with the Central Bank of the Philippines as profit to be remitted abroad. (Revenue Memorandum Circular No. 8-82 dated March 17, 1982). However, you contend that the 15% profit remittance tax would be based on the profits actually remitted abroad, citing in support thereof the decision of the Supreme Court in the case of Commissioner vs. Burroughs Limited, et al., (G.R. No. 66653, June 19, 1986) This contention is untenable. It should be noted that in ruling of this Office of January 21, 1980, profit actually remitted abroad shall be the basis of the profit remittance tax. The Supreme Court ruled that this ruling of January 21, 1980 is the applicable ruling because the taxpayer therein (Burroughs Limited) paid the branch profit remittance tax on March 14, 1979. The Court further ruled that Revenue Memorandum Circular No. 8-82 dated March 17, 1982 cannot be given retroactive effect, the same being prejudicial to the taxpayer. [Sec. 327 (now Sec. 278), Tax Code]. Such being the case, the ruling of the Supreme Court in said case of Burroughs Limited cannot be applied to the instant case which involves profit remittance tax paid on April 21, 1987 at the time when Revenue Memorandum Circular No. 8-82 was already in force. iatdc Regarding your claims for refund, it appears that the amount actually applied for by you with the Central Bank as profit to be remitted abroad is P5,813,438.67 and that you have paid 15% thereof in the amount of P872,015.80 as branch profit remittance tax. Since said payment is in accordance with Revenue Memorandum Circular No. 8-82 dated March 17, 1982, the same was collected in accordance with law. Accordingly, you did not incur any overpayment in the amount of P113,741.19, in which case, the refund thereof has to be, as it is hereby, denied. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner