ITAD Ruling No. 031-00

February 2, 2000 ITAD RULING NO. 031-00 RP-Singapore, Art. 10 010-84 Rohm Electronics Philippines, Inc. Peoples Technology Complex Carmona 4116, Cavite Attention: Mr . Minoru Tabata General Manager/Director Gentlemen : This refers to your application for tax treaty relief to avail of the 15% withholding tax rate on dividend remittances of Rohm Electronics Philippines, Inc. (REPI) to Rohm Electronics Asia Pte., Ltd. (Rohm Asia) pursuant to RP-Singapore Tax Treaty. cdll It is represented that Rohm Asia is a non-resident foreign corporation organized and existing under the laws of Singapore with business address at 9 Temasek Boulevard #20-02, Suntec Tower 2 Singapore 038989; that REPI is a domestic corporation organized and existing under Philippine laws with business address at Peoples Technology Complex, Carmona 4116, Cavite; that on March 31, 1999 the Board of Directors of REPI declared cash dividends in the amount of PHP496,174,000.00 to its stockholders of records as of even date; that said dividend is payable on July 29, 1999 and October 29, 1999; that at the time of the declaration of said dividends, Rohm Asia owns 1,960,000 shares out of the total 9,800,000 shares of REPI or 20% shareholdings. In reply, please be informed that Article 10 (1) (2) of the RP-Singapore Tax treaty states that: "Article 10 DIVIDENDS 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the law of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: (a) 15 per cent of the gross amount of the dividends if the recipient is a company (including partnership) and during the part of the paying companys taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year (if any), at least 15 per cent of the outstanding shares of the voting stock of the paying company was owned by the recipient company; and (b) in all other cases, 25 per cent of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation." Since Rohm Asia is the recipient and the beneficial owner of the dividends and owns 20% of the outstanding shares of the voting stock of the paying company (REPI) as evidenced by the Secretarys Certificate dated July 23, 1999, the said cash dividends in the amount of PHP99,234,800.00 out of the total PHP496,174,000.00 (shown in the Audited Financial Statement of REPI as of March 31, 1999) are subject to 15% final withholding tax rate pursuant to the above-quoted provision of RP-Singapore Tax Treaty.(BIR Ruling No. 010-84) This ruling is being issued based on the foregoing representations. However, if upon investigation, it will be disclosed or discovered that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group