BIR Ruling No. 239-82

August 25, 1982 BIR RULING NO. 239-82 024-b 000-00 239-82 Joaquin Cunanan & Co. 8th Floor, Rufino Bldg. 6784 Ayala Ave., Makati Metro Manila Attention: Mr . H . D . Tingson, Jr . Gentlemen : This refers to your letter dated April 26, 1982 requesting confirmation of your opinion to the effect that the cash dividends in the total amount of P490,000.00 which your client, FOSECO PHILIPPINES, INC. (FOSECO) will remit to FOSECO TRANSNATIONAL, LTD., are subject to 15% withholding tax. It is represented that FOSECO is a corporation organized and established under Philippine laws; that 60% of FOSECO's issued capital stock is owned by FOSECO TRANSNATIONAL, LTD., a corporation organized and established under the laws of England; and that FOSECO is registered with the Board of Investments in accordance with the provisions of Republic Act No. 5455, as amended. cdtech In reply thereto, I have the honor to inform you that Section 1(a) and (b), Article 9 of the RP-UK Tax Treaty provides, viz: " Article 9 Dividends "1. Dividends derived from a company which is a resident of the Philippines by a resident of the United Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in the Philippines but where such dividends are beneficially owned by a resident of the United Kingdom the tax so charged shall not exceed: "(a) 15% of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends; and (b) in all other cases, 25% of the gross amount of the dividends." In view thereof, and since FOSECO TRANSNATIONAL, LTD. owns more than 10% of the issued capital stock of FOSECO, the cash dividends in the total amount of P490,000.00 which will be remitted by FOSECO to FOSECO TRANSNATIONAL, LTD., are subject to 15% withholding tax. cdtech Very truly yours, TOMAS C. TOLEDO Acting Commissioner