BIR Ruling No. 286-82

October 20, 1982 BIR RULING NO. 286-82 037-a 046-80 286-82 W & A Gilbey Limited 17 Cornwall Terrace, Regents Park London NW1 40P Attention: W . G . Chapman Gentlemen : This refers to your letter dated September 30, 1982 addressed to Deputy Minister de Roda, which was referred to this Office for action, requesting information whether the tax on royalties paid by La Tondea Inc. to W. & A. Gilbey Ltd. is 15% or 25% of gross. The relevant provision of Article 11 of the RP-UK Treaty reads: "Such royalties may also be taxed in the Contracting State in which they arise and according to the law of that State. However, the tax so charged shall not exceed a) 15 percent of the gross amount if the royalties are paid by an enterprise registered with the Philippine Board of Investments and engaged in preferred areas of activities and also royalties in respect of cinematographic films and films or tapes for television or broadcasting; b) in all other cases, 25 percent of the gross amount of royalties." In reply, I have the honor to inform you that, since our findings show that La Tondea Inc. is not registered with the Philippine Board of Investments and is not engaged in preferred areas of activities, applying the aforequoted provision, the royalties paid by La Tondea Inc. to that corporation, a resident of the United Kingdom, are subject to the 25% withholding tax. Very truly yours, RUBEN B. ANCHETA Acting Commissioner