ITAD Ruling No. 032-99

October 7, 1999 ITAD RULING NO. 032-99 RP-Netherlands Article 10 000-00 Unilever Philippines, Inc 1351 United Nations Avenue Manila, Philippines Attention: Ms . Anna Maria B . Torres Senior Financial Accountant M a d a m : This refers to your letter dated May 3, 1999, requesting for the renewal of the authority previously granted by this Office on July 21, 1993 relative to the availment of the preferential tax treaty rate of ten per cent (10%) on dividends paid to Mavibel B. V. pursuant to paragraph (2)(a) Article 10 of the RP-Netherlands Tax Treaty. It is represented that MAVIBEL B.V. is a non-resident foreign corporation with business address at Weena 455,3013 AL Rotterdam, The Netherlands, with no permanent establishment here in the Philippines per certification dated July 1, 1999 issued by the Securities and Exchange Commission; that UNILEVER PHILIPPINES, INC. is a domestic corporation with principal office at 1351 United Nations Avenue, Manila, Philippines; that UNILEVER, PHILIPPINES, INC. is wholly owned by MAVIBEL B.V. holding 4,918,515 common shares of stock with a total par value of P 245,925,750; that on April 27, 1999, UNILEVER, PHILIPPINES, INC. declared cash dividends of P593,482,397 out of the retained earnings of the corporation payable to stockholders in proportion to their respective shares as of December 31, 1998. LexLib In reply, please be informed that pursuant to Article 10 paragraph 2(a) of RP-Netherlands Tax Treaty provides, viz: "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; prcd b) 15 per cent of the gross amount of the dividends in all other cases. 3. . . . 4. . . . 5. The term dividends as used in this Article means income from shares, jouissance shares or jouissance rights, mining shares, founders shares or other rights participating in profits, as well as income from debt-claims participating in profits and income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation law of the State of which the company making the distribution is a resident. xxx xxx xxx Such being the case, your request for the renewal of your previous authority to avail the preferential tax treaty rate of 10% on the dividends under consideration is hereby granted. The said tax should be withheld by Unilever Philippines, Inc. before actual remittance. This ruling is being 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. cdlex Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group