Slide 1

When income or profits are taxed twice

For example, corporate profits may be taxed first when earned by the corporation (corporation
tax) and again when the profits are distributed to shareholders as a dividend or other distribution
(dividend tax).

Slide 2

Double taxation is a tax principle na nag refer sa income taxes na nagpaid twice on the same source of
income.

Direct double taxation – Para masabing direct double taxation dapat yung dalawang tax na inimposed
sayo ay same taxing authority, same purpose, within the same jurisdiction during the same taxing
period. Also must be same kind or character. At Ito din ay bawal sa Philippines dahil It violates the
constitution dahil hindi tayo pwede taxan ng twice.

Indirect double taxation – Yung burden ng imposition niya although double but different taxing
authorities and different purpose or other reason. And this is not legally objectionable.

Slide 3

Ang international double taxation is pwedeng alisin or make less strict unilaterally or ito yung kung saan
yung isang state is mag impose ng taxes on a particular object or object within its jurisdiction. For
bilaterally, ito yung type ng tax treaty signed by two nations. and later mas ipapaliwanag yung kung
anon ga ba ang tax treaty and ano ang benefits nito.

Slide 4

Yung jurisdictions is nag apply ng methods para mailiminate yung international

juridical double taxation, ito yung exemption method and the credit method. Tax
exemption is through tax treaties and it is the transaction that are free from tax
while tax credit is deductible from the tax due. For the deductions, yung foreign
income tax payments is part of the operating expense or cost of the taxpayer. For
reciprocity, binibigyan ng eual tax benefit.

Slide 5

Ang tax treaties ay pag ang taxpayers ay may income sourced in other countries than their
country of residence, or pag sila ay may property and wealth located in other countries. A tax
treaty is a bilateral (two-party) agreement made by two countries to resolve
issues involving double taxation of passive and active income of each of their
respective citizens

So who can avail ng aba ng tax treaty benefits. Una na is kailangan……

 The Double Taxation Convention or tax treaties contain a standard provision that
“the Convention shall apply to persons who are residents of one or both of the
Contracting States”.

 The benefit of a tax treaty does not extend to a taxpayer who fails to prove
his/her/its residency in either or both of the contracting states. The best proof of
residency is the TRC duly issued by the competent authority of the treaty partner.

Slide 6

Preferential rates

Slide 7

Exemption

Slide 8

REGULAR TAX RATE UNDER THE TAX CODE VS. TAX TREATY RATES

Slide 9

International Tax Affairs Division (ITAD)

Tax Residency Certificate (TRC)

Slide 10

So lahat ng Tax Treaty Relief Applications or Request For Confirmations only be submitted to the
International Tax Affairs Divisionn (ITAD). Depending on the type of income, the request for
confirmation with complete documentary requirements shall be filed by the withholding agent

So merong two types ang income ang capital gains and other income. So when is the deadline nga ba ng
pag fill sa kanila.

pag capital gains ang date of filling niya is…

Pag other income naman is…

For calendar year ended December 31, 2022, the income payee or the non-residents can file the RFC or
TTRA from January 1, 2023 until April 30, 2023.

What income payments are covered?

A request for confirmation (RFC) or tax treaty relief application (TTRA) shall be filed for all income (e.g.
royalties, interests, dividends, business profits, capital gains) derived by non-residents from Philippine
sources that may be entitled to relief from double taxation under relevant tax treaties.

Slide 11

These are the following requirements to be submitted when filling the Tax Treaty Relief Application
(TTRA) or Request For Confirmation (RFC)

Revenue Memorandum Order (RMO) This

Order shall cover all items of income derived
by nonresident taxpayers from Philippine sources that are entitled to relief
from double taxation under the relevant tax treaty.

Slide 12

The International Tax Affairs Division (ITAD) sila ang in - charge ng pag receive and process ng lahat ng
applications for the issuance of TRCs or the Tax Residency Certificate. So yung mga rules na involve sa
application ng tax treaties ay originate from the ITAD

Slide 13

So merong various models of tax treaties, una na dito ang OECD. It is used by a large number of
developed countries when entering into tax treaties.

Slide 14

Ito din is an international intergovernmental economic organization that works to build better policies
for better lives.

The main goal of the organization is to shape policies that foster prosperity, equality, opportunity and
well being for all.
Slide 15

1 Failure to provide the said documents when requested may lead to withholding using the regular rates
prescribed under the Tax Code,

2the former shall file with ITAD a request for confirmation on the propriety of the withholding tax rates
applied on that item of income. the nonresident shall file a TTRA with ITAD. In either case, each request
for confirmation and TTRA shall be supported by the documentary requirements set out hereunder.

3 The filing of TTRA largely depends upon the nonresident who must invoke and prove his/her/its
entitlement to treaty benefit. The nonresident may, at any time after the receipt of income, file a TTRA
to prove its entitlement to treaty benefits. Failure to prove the same may result in the confirmation of
the tax rate previously applied on the income, and in the eventual denial of the TTRA.

4.If the BIR determines the nonresident taxpayer is not entitled to treaty
benefits, it will issue a BIR Ruling denying the request for confirmation or
TTRA.
Slide 16

Generally, one TTRA or request for confirmation shall be filed for each transaction

New TTRAs shall be processed within four (4) months from the submission of complete documents or as
soon as practicable provided that the ITAD has addressed all its backlogs.

Are long-term contracts required to be updated annually?

For long-term contracts involving the payment of interest, royalties and other types of income where
the condition for entitlement to treaty benefits is not dependent on a time threshold, annual updating
is not mandatory. However, the withholding agent should ensure that the non-resident continues to be
a resident of the same country for the whole duration of the contract by requesting an updated Tax
Residency Certificate (TRC) from the non-resident.

In the case of long-term contract of services where the existence of a PE in the Philippines is dependent
on time threshold (e.g., days of physical presence of the nonresident company's employees in the
Philippines within a twelve-month period or calendar year or taxable year), the annual updating
is mandatory. For contract of services, the Certificate of Entitlement to Treaty Benefit (COE) shall be
limited to a particular period of engagement.
A TTRA is filed by a non-resident foreign corporation or individual whose income from Philippine
sources was subjected to tax in accordance with the provisions of the treaty, while an RFC is filed by a
withholding agent whose income payment to the nonresident foreign corporation or individual was
subjected to tax in accordance with the provisions of the treaty.