Amendments to RMO No. 7-85 Providing for Reports on Taxable Transactions for the Exchange of Information Program under the Philippine Tax Treaty

October 24, 1990 REVENUE MEMORANDUM ORDER NO. 46-90 SUBJECT : Amendments to RMO No. 7-85 Providing for Reports on Taxable Transactions for the Exchange of Information Program under the Philippine Tax Treaty TO : All Revenue District Officers, Chief (International Tax Affairs Division), Other Heads of Audit Offices, and Others Concerned I. Preliminary Statement Revenue Memorandum Order No. 7-85 requires the reporting by revenue officers of transactions that could be of interest to the treaty partners of the Philippines. These transactions can be obtained in the course of the audit of taxpayers by the revenue officers. Prescribed hereunder in Part II are the revised guidelines and procedures in implementing this. II. Guidelines A. Informations to be presented in BIR Form No. TC-004 (as revised) Transactions specified in Section C below between the corporation in the Philippines and persons specified in the Section B are to be reported in the form. B. Definition of Foreign person A foreign person is: a) Any individual who is not a citizen or resident of the Philippines; b) Any partnership, association, company or corporation that was not created or organized under the law of the Philippines; c) Any foreign trust or estate; d) Any foreign government, agency or its instrumentality; e) Any Philippine branch of a corporation organized in a foreign country. C. Reportable transactions and its corresponding code Transactions of Code corporation (indicate in form) Receipts of Corporation from Foreign Person 1. Sales of stock in trade R1 2. Sales of personal property other than stock in trade R2 3. Sales of real property in the Philippines R3 4. Sales of domestic shares of stock R4 5. Rents or lease received R5 6. Royalties or licensing received R6 7. Considerations received for services rendered R7 8. Commissions received R8 9. Amounts borrowed R9 10. Interests received R10 11. Capital/equity withdrawn/sold R11 12. Dividends/share in profits received R12 13. Others (specify) R13 Payments or Charges of Corporation to Foreign Person 14. Purchases of stock in trade P1 15. Purchases of personal property other than stock in trade P2 16. Purchases of real property in the Philippines P3 17. Purchases of domestic shares of stock P4 18. Rents or leases paid P5 19. Royalties or licensing paid P6 20. Considerations paid for services rendered P7 21. Commissions received P8 22. Amounts loaned P9 23. Interest paid P10 24. Capital/equity placed/invested P11 25. Dividends/share on profits paid P12 26. Others (specify) P13 Example: If the corporation being investigated sold stock in trade to a foreign person, the code to indicate is "R1". If the reporting corporation being investigated purchases stock in trade from a foreign person, the code to indicate is "P1". The totals of these transactions shall be indicated in one box of Form No. TC-OO4. D. Amount received/paid or charged - Only amounts received from or paid/charged to a particular foreign person totalling ten thousand pesos or more shall be included. Only the totals of each transaction shall be indicated. The items that may be included in lines 13 and 26 above are exchange transactions, head office expense allocations or reimbursements of expenses. E. When and where to forward - Form No. TC-004 shall be forwarded to the Chief, International Tax Affairs Division not later than the 60th day from date of serving of the Letter of Authority authorizing the investigation of the particular corporation. If available, supporting documents must accompany this form. aisa dc III. Management Audit and Summary Report The Chief, International Tax Affairs Division and Chief, Management Information and Data Control Systems Division shall conduct the necessary management audits to verify if the requirements of this order are being complied with. Furthermore, all Revenue District Officers shall send by telegram to the Chief, International Tax Affairs Division (ITAD) a summary report on the number of BIR Form No. TC-004 forwarded to the ITAD each month. The telegrams must be sent not later than the 10th day of the following month. IV. Repealing Clause The provisions of RMO 7-85 inconsistent herewith are hereby amended and/or repealed. The accompanying BIR Form No. TC-004, as revised, shall henceforth be used for the reporting requirements. V. Effectivity All Revenue Officers conducting audits covered by Letters of Authority dated on or after November 5, 1990 shall comply with the requirements of this Order. (SGD.) JOSE U. ONG Commissioner of Internal Revenue