ITAD BIR Ruling No. 279-15

October 16, 2015 ITAD BIR RULING NO. 279-15 Article 10, Philippines-Japan tax treaty, as amended Transnational Diversified Corporation The Penthouse, Net Quad Building 4th Avenue corner 30th Street E-Square Crescent Park West Bonifacio Global City, Taguig Attention: Melitha F. Gasapos Corporate Secretary Gentlemen : This refers to your request for review of BIR Ruling No. ITAD-253-13 filed with the Department of Finance (DOF) on 11 October 2013 on behalf of Nippon Yusen Kabushiki Kaisha (NYK) , which was indorsed to this Bureau on 09 May 2014 for appropriate action, inviting attention to the ruling of the Supreme Court in the case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue , G.R. 18885550 n dated 19 August 2013 (Deutsche Bank case) . Documents show that on 22 August 2013, the Bureau of Internal Revenue (BIR) issued BIR Ruling No. ITAD-253-13 partially denying the Tax Treaty Relief Application (TTRA) of NYK on its dividend income from NYK Logistics Philippines, Inc. (NLPH) , (2) NYK Fil-Japan Shipping Corporation (NYK-FJSC) and (3) NYK-Fil Ship Management, Inc. (NYK-FIL) , specifically for the dividend payments made prior to the filing of the TTRA on 22 June 2011. The partial denial was pursuant to the requirement under Revenue Memorandum Order (RMO) No. 1-2000 that any availment of tax treaty relief must be preceded by an application with the BIR-International Tax Affairs Division (ITAD) at least fifteen (15) days before the transaction. In view thereof and in light of the Supreme Court decision in the case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue 1 holding in substance that tax treaty relief cannot be denied based solely on the taxpayer's non-compliance with the 15-day period requirement, BIR Ruling No. ITAD-253-13 is hereby revised accordingly. Hence, considering that NYK owns more than 10 percent of the outstanding shares of the common stock of the paying corporations NLPH, NYK-FJSC and NYK-FIL since December 31, 2010 which is more than the period of six months immediately preceding the date of payment of the dividends, this Office hereby rules that the dividends paid by NLPH, NYK-FJSC and NYK-FIL to NYK are subject to the preferential rate of 10 percent withholding tax pursuant to Article 10 (2) (a) of the Philippines-Japan tax treaty, as amended. TIADCc Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue Footnotes 1. G.R. 18885550 n dated 19 August 2013. n Note from the Publisher: Copied verbatim from the official copy. "G.R. 18885550" should read as "G.R. 188550".