ITAD Ruling No. 053-99

December 23, 1999 ITAD RULING NO. 053-99 RP-Japan Article 10 ITAD #20-99 Mr. Kunihiko Aazuma President & General Manager FCC (Philippines) Corporation 106 North Science Avenue, Laguna Technopark Bian, Laguna Philippines S i r : This refers to your application for relief from double taxation dated July 30, 1999 on behalf of FCC Company Ltd. of Japan , requesting for a preferential tax rate of Ten per cent (10%) to be held on dividend remittances by FCC (Philippines) Corporation , pursuant to the RP-Japan Tax Treaty. It is represented that FCC-Japan is a non-resident foreign corporation, duly organized and existing under the laws of Japan with a principal address at No. 7000-36 Technoland, Hosea-Cho Inasa-Gun, Shizuoka Prefecture 431-13, Japan; that it is not registered either as a corporation/partnership in the Philippines as per certification dated July 20, 1999 issued by the Securities and Exchange Commission; that FCC-Phils . is a corporation duly organized and existing under the laws of the Philippines; that FCC-Japan holds one hundred percent (100%) of the capital stock of FCC-Phils .; that on August 11, 1999, the Board of Directors of FCC-Phils . passed and approved the declaration of cash dividends in the amount of six million two hundred fifty thousand pesos (P6,250,000.00), payable to the stockholder of record as of March 31, 1999. In reply, please be informed that Article 10 of the RP-Japan Tax Treaty provides as follows: "Article 10 "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 Contracting State. "2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that Contracting 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 beneficial owner is a company which holds directly at least 25% either of the voting shares of the company paying the dividends or of the total shares issued by that company during the period of six months immediately preceding the date of payment of the dividends; b) 25 per cent of the gross amount of the dividends in all other cases. xxx xxx xxx "3. . . . "4. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident. xxx xxx xxx In view of the foregoing, and since FCC-Japan holds one hundred per cent (100%) of the capital stock of FCC-Phils ., your application for a preferential tax treaty rate of 10% to be withheld by FCC-Phils . on its dividend remittances to FCC-Japan is hereby approved . (BIR Ruling No. ITAD 20-99) prcd 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 null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group