ITAD Ruling No. 029-01

March 12, 2001 ITAD RULING NO. 029-01 RP-Netherlands; Article 10 BIR Ruling No. ITAD-82-00 Ing Forex Corporation 12/F Tower One Ayala Triangle 1200 Makati City Attention: Ms . Christine Dinah Lim President Gentlemen : This has reference to your letter dated September 6, 2000 requesting confirmation of your opinion that the dividends to be paid and remitted on behalf of ING Forex Corporation (ING Forex) to its non-resident shareholder, ING Bank N.V. (ING Bank), are subject to final withholding tax at the preferential tax rate of 10 per cent pursuant to Article 10 (2)(a) of the RP-Netherlands Tax Treaty. It is represented that ING Bank is a non-resident foreign corporation duly organized and existing under the laws of Netherlands with principal office at De Amsterdamse Poort 1102 MG Amsterdam Zuidoost P.O. Box 1800, 1000 B.V. Amsterdam; that it is not registered as a corporation/partnership licensed to do business in the Philippines as per Securities and Exchange Commission certification dated December 26, 2000; that ING Forex is a corporation duly organized and existing under and by virtue of the laws of the Philippines and engaged in managing, financing and providing personal or real security for the obligations or the provisions of services to other business enterprises and also conduct banking business including acting as a broker/dealer in insurance, acquire, establish and manage real estate; that on February 11, 2000, the Board of Directors of ING Forex Corporation declared cash dividends out of its retained earnings in the amount of P38,673,794.00 to its stockholders of record as of January 31, 2000; that the said dividends are payable on or before September 30, 2000; and that at the time of the declaration of said dividends, ING Forex owns 135,000 shares, of which 134,995 are held by ING Bank N.V. which is equivalent to 99.99% of ING Forex's outstanding capital stock. In reply, please be informed that Article 10 of the RP-Netherlands Tax Treaty provides: "Article 10 Dividends "1. Dividends paid by a company which is a resident of one of the States to a resident of the other State may be taxed in that other State. 2. However, such dividends may also be taxed in the State of which the company paying the dividends is a resident and according to the laws of that State but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: a) 10 per cent of the gross amount of the dividends if the recipient is a company the capital of which is wholly or partly divided into shares and which holds directly at least 10 per cent of the capital of the company paying the dividends; b) 15 per cent of the gross amount of the dividends in all other cases. xxx xxx xxx In view of the foregoing, and since ING Bank owns 99.99% of the total capital stock of ING Forex as of record date, your opinion is hereby confirmed. The cash dividends to be paid and remitted by ING Forex Corporation (ING Forex) to ING Bank N.V. (ING Bank) are subject to final withholding tax at the preferential rate of 10 per cent pursuant to the aforequoted provisions of the RP-Netherlands Tax Treaty. (BIR Ruling No. ITAD-82-00) This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group