ITAD BIR Ruling No. 092-13

April 4, 2013 ITAD BIR RULING NO. 092-13 Article 10, Philippines-Singapore Tax Treaty; BIR Ruling No. ITAD 211-11 Air Liquide Phils., Inc. Lot 37 DBP Avenue, FTI Complex, Taguig, Metro Manila Attention: Joffrey G. Manaid VP-Finance, Purchasing Gentlemen : This refers to your Tax Treaty Relief Application ("TTRA") filed on 13 December 2011, requesting confirmation that dividends paid by Air Liquide Phils. Inc., ("Air-Phils.") to Air Liquide Industrial Services PTE Ltd. ("Air-Singapore") , are subject to the preferential tax rate of 15 percent (15%) pursuant to Article 10 of the Convention between the Republic of the Philippines and the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income ("Philippines-Singapore tax treaty") . 1 It is represented that Air-Singapore is a corporation organized and existing under the laws of Singapore and is a resident thereof based on the Certificate of Residence issued by the Assistant Commissioner, Corporate Tax Division for Comptroller of Income Tax, Inland Revenue Authority of Singapore, dated 20 September 2010 as authenticated by the Consul General of the Republic of the Philippines in and for Singapore dated 27 September 2010; that Air-Singapore was issued a license to transact business in the Philippines, which was cancelled on 21 November 1996, as evidenced by Certificate of Corporate Filing/Information issued by the Securities and Exchange Commission (SEC) dated 15 December 2011; that as a consequence thereof, Air-Singapore is no longer registered as a corporation or partnership in the Philippines, as evidenced by the Certification of Non-Registration of Company also issued by the SEC, dated 18 May 2012; and that, on the other hand, Air-Phils. is a corporation organized and existing under the laws of the Philippines with principal address at Lot 37, DBP Ave., FTI Complex, Taguig City. It is further represented, as certified by the Corporate Secretary of Air-Phils. , dated 18 November 2011 that, during its meeting held on 16 November 2011, the Board of Directors of Air-Phils. , declared cash dividends in the aggregate amount of One Hundred Fifty Million Pesos (Php150,000,000.00) payable to stockholders of record on or before 24 November 2011; and that Air-Singapore holds Eight Hundred Eighty-One Million Four Hundred Ninety-One Thousand Three Hundred Ninety-Five (881,491,395) common shares of Air-Phils. amounting to Seventy-Four percent (74%) of the outstanding stock thereof. It is further represented that Air-Phils. paid the subject dividends through Citibank Manila ("Citibank") to BNP Paribas-Singapore Branch via Citibank New York ("Citibank NY") , by telegraphic transfer in favor of Air-Singapore in the amount of USD Two Million Nine Hundred Forty Four Thousand Five Hundred Eighty Seven & 75/100 ("USD2,994,587.75), inclusive of charges, on 23 November 2011 as evidenced by a certification issued by Citibank dated 04 October 2012. CaESTA It is finally represented that the dividends subject of this TTRA are not under investigation, on-going audit, administrative protest, claim for refund or issuance of a tax credit certificate, collection proceedings, or judicial appeal, based on the Certification issued by the Vice-President for Finance, Purchasing, and Information Technology of Air-Phils. executed on 09 December 2011. Ruling In reply, please be informed that Section 14 of Revenue Memorandum Order ("RMO") No. 72-2010, 2 provides: "SEC. 14. When and Where to File the TTRA . All tax treaty relief applications (updated BIR Forms Nos. 0901-D, 0901-I, 0901-R, 0901-P, 0901-S, 0901-T, 0901-O and 0901-C) relative to the implementation and interpretation of the provisions of Philippine tax treaties shall only be submitted to and received by the International Tax Affairs Divisions (ITAD). If the forms of any necessary documents are submitted to any other BIR office, the application shall be considered as improperly filed. Filing should always be made BEFORE the transaction. Transaction for purposes of filing the TTRA shall mean before the occurrence of the first taxable event. Failure to properly file the TTRA with ITAD within the period prescribed herein shall have the effect disqualifying the TTRA under this RMO." Based on the documents submitted, Air-Phils. declared the subject dividends on 16 November 2011 and paid the dividends on 23 November 2011, paid through telegraphic transfer in favor of Air-Singapore . The TTRA on the other hand, was filed only on 13 December 2011. Clearly, the filing of the TTRA was not made before the transaction as required under Sec. 14 of RMO No. 72-2010. In view of the foregoing, the TTRA for the application for the preferential tax rate is hereby denied for having been filed beyond the period prescribed by the RMO. (ITAD BIR RULING NO. 211-11) 3 HcSETI Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. Its provisions on taxes apply on income derived or which accrued beginning January 1, 1977. 2. Published in the Manila Bulletin on October 20, 2010. 3. Dated August 15, 2011.