Procedure for Processing Applications for Tax Relief Under Existing Tax Treaties

January 28, 1986 REVENUE MEMORANDUM ORDER NO. 02-86 SUBJECT : Procedure for Processing Applications for Tax Relief Under Existing Tax Treaties TO : The Service Chiefs, and All Division Chiefs under the Sector Operations, National Assessment and Legal Offices, and All Others Concerned SECTION 1. Rationale . The objective of this Order is to consolidate in the International Taxation Division the processing and verification of application for tax relief in accordance with the provisions in the existing tax treaties enforced between the Republic of the Philippines and other countries, in order to achieve efficiency and uniformity. cd SECTION 2. Coverage . This Order covers exclusively application for tax treaty relief, that is, for tax exemption, beneficial treaty rate, refund or tax credit of taxes on the following income items under existing tax treaties, to wit: a. dividends b. interests c. royalties d. business profits e. capital gains f. salary, compensation, honorarium allowance, etc. g. scholarship grant h. services/entertainment i. profits from the operation of shipping and aircraft. SECTION 3. Procedure . Applications for tax relief must be filed, in duplicate copies (BIR Form No. TC-001 or TC-002, as the case may be), with the International Taxation Division, Legal Office, BIR National Office Bldg., Diliman, Quezon City. Applications must be accompanied by supporting documents justifying the relief sought by the taxpayer/applicant. If tax refund/tax credit is requested, the following documents must be submitted: 1) Letter request for tax refund/tax credit; 2) Authenticated Xerox copy of Income Tax Return where erroneous or overpayment of the Tax is reflected; 3) Withholding Tax Form No. 2; 4) Originals of Revenue Official Receipt/Payment Order Confirmation Receipt. In case of a claim for tax refund/tax credit it is mandatory that the written claim must be filed with the Commissioner of Internal Revenue within the two-year period prescribed by Section 295 of the National Internal Revenue Code, as amended by Presidential Decree No. 1773. The International Taxation Division shall process such applications and determine whether or not the taxpayer/applicant is entitled to the relief requested. Any grant for exemption or for beneficial treaty rate shall be in a numbered ruling form, to serve as guidelines and precedents for similar cases in the future. Actions of this Division on tax credit or refund claims shall be in the form of a Memorandum Decision which shall be attached to the processed application form and corresponding investigation report and submitted for endorsement by the Chief, Legal Office, to the Commissioner for final approval/disapproval. Tax credit memo issued, in case of approved claims shall be serially numbered and in accountable form. In case of a tax refund/tax credit, the Chief, International Taxation Division should see to it, before the Memorandum-Decision is prepared, that: a) the report of investigation shall have been conducted and submitted by the International Operations Division, or the proper investigating division/office which may be any division under the Sector Operations Office, depending upon the line of industry/jurisdiction, or a Revenue District Office; b) the Accounting Division has verified the remittance of the tax and certified the payment thereof; and c) the Receivable Accounts Division has verified and certified as to whether or not the taxpayer has existing tax liabilities. The action prepared by the International Taxation Division involving claims for tax refund/tax credit in the amount of P50,000 and above should be addressed to the Commissioner, or to the Deputy Commissioner if the amount is below P50,000. If the claim is for tax credit, a tax credit memo shall be prepared in four (4) copies, furnishing a copy thereof to the Receivable Accounts Division. If the taxpayer has an outstanding tax liability, the taxpayer shall be required to submit proof of payment thereof. Otherwise, and in the absence of a protest filed within the reglementary period prescribed by law, the approved claim including the entire docket of the case, shall be forwarded to the Receivable Accounts Division, with instructions to apply the tax credit in payment of the tax liability of the taxpayer. Once applied, the Receivable Accounts Division shall issue the corresponding Tax Debit Memo confirming such applications. If the claim is for tax refund, the entire docket together with the approved Memorandum-Decision of the International Taxation Division shall be forwarded to the Accounting Division, who shall prepare the disbursement voucher covering the refundable amount. It is the responsibility of the Accounting Division to check the completeness of the supporting documents; verification of the mathematical accuracy of the findings as reflected in the Memorandum-approval; verification if the check payments of the taxpayer were not dishonored; the recording of the Disbursement Voucher in the Voucher Register and the forwarding of the case to the Internal Control Unit, Financial & Management Service for pre-audit. casia The General Service Division shall prepare and sign the corresponding Treasury Warrant and thereafter follow the ordinary existing procedure. SECTION 4. Official Record Book . The International Taxation Division shall keep a separate Official Record Book on all taxpayers or recipients of income applying for tax relief under this Order. The actions made by the Commissioner/Deputy Commissioner in connection herewith shall be the final decision appealable to the Appellate Court. SECTION 5. Repealing Clause . Provisions of all previous Revenue Memorandum Orders and other issuances which are inconsistent herewith are hereby revoked or modified accordingly. acd SECTION 6. Effectivity . This Revenue Memorandum Order shall take effect immediately. (SGD.) RUBEN B. ANCHETA Acting Commissioner