December 23, 1999

ITAD RULING NO. 054-99

RP-Netherlands Article 12
038-97

Joaquin Cunanan & Co.

14th Floor Multinational Bancorporation Center
6805 Ayala Avenue, Makati City

Attention: Tomasa H. Lipana

Managing Partner, Tax Services

Gentlemen :

This refers to your application for relief from double taxation dated July 30, 1999 on behalf of your
client UNILEVER N. V. (UNV) requesting for a preferential tax treaty rate of 15 per cent to be withheld on
dividend remittances by SELECTA WALL’S, INC. (SWI) pursuant to RP-Netherlands Tax Treaty. cdphil

It is represented that UNV is a non-resident foreign corporation duly organized and existing under
the laws of Netherlands with principal office at Weena 455, 3013 AL Rotterdam, Netherlands; that UNV
has no permanent establishment in the Philippines as evidenced by its Certificate of Non-Registration from
the Securities and Exchange Commission dated August 5, 1999; that UNV entered into a Service
Agreement with SWI, a domestic corporation engaged in the manufacture and sale of various ice cream
products under the trade name "Selecta"; that SWI is duly registered with the Securities and Exchange
Commission under Registration No. A199902956; that it has its principal office at Manggahan Light
Industrial Park, A. Rodriguez Avenue, Bo. Manggahan, Pasig; that the Service Agreement between UNV
and SWI dated April 28,1999 was duly registered with the Intellectual Property Office with Certificate of
Compliance No. 5-1999-00045 with validity from April 1, 1999 to March 31, 2009; that the services to be
rendered by UNV to SWI shall include but are not limited to training, research and development,
trademarks, communication of patents, secret processes, access to central services and advisory
department, advice on sourcing/buying raw materials, etc.; and that for and in consideration of the Service
Agreement, SWI shall pay to UNV within one (1) month from the end of each quarter to which the fee
relates: a) a services fee of three per cent (3%) in the third party net sales and b) a bonus royalty of two
per cent (2%) of net foreign exchange earnings of all Agreement Products during the quarter. cda

In reply, please be informed that Article 12, paragraph 2(b) of the RP-Netherlands Tax Treaty
provides, viz:

"Article 12

Royalties

1. Royalties arising in one of the States and paid to a resident of the other State may be
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 1
 taxed in that other State.

2. However, such royalties may also be taxed in the State in which they arise, and
according to the laws of that State, but if the recipient is the beneficial owner of the royalties the
tax so charged shall not exceed:

(a) 10 per cent of the gross amount of the royalties where the royalties are paid
by an enterprise registered, and engaged in preferred areas of activities in that State; and

(b) 15 per cent of the gross amount of the royalties in all other cases.

3. ...

4. The term "royalties" as used in this Article means payment of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films or tapes for radio or television broadcasting, any patent, trademark,
design or model, plan, secret formula or process, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information concerning industrial, commercial or
scientific experience. llcd

xxx xxx xxx"

Accordingly, this Office hereby confirms your opinion that the royalty remittances of your client,
SWI to UNV shall be subjected to the preferential tax rate of 15 percent. (BIR Ruling 038-97 dated April 3,
1997)

Moreover, SWI shall be responsible for the payment of Value-Added Tax on such royalties in
behalf of UNV by filing a separate VAT return pursuant to Section 4.102-1(b) of Revenue Regulations No.
7-95 as amended by Revenue Regulations No. 6-97, which provides that:

"The VAT on rental and/or royalties payable to non-resident foreign corporation or owners
for the sale of services and use or lease of properties in the Philippines shall be based on the
contract price agreed upon by the licensor and the licensee. The Licensee shall be responsible for
the payment of VAT on such rentals and/or royalties in behalf of the non-resident foreign
corporation or owned by filing a separate VAT declaration/return for this purpose. The duly
validated VAT declaration/return is sufficient evidence in claiming input tax credit by the
licensee."

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. LexLib

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 2
 Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

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
Biñan, Laguna Philippines

Sir:

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. cdphil

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. cda

"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
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 3
 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
Bureau of Internal Revenue

December 23, 1999

ITAD RULING NO. 052-99

RP-US Article 14

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 4
 UN-074-2-22-95

SyCip Salazar Hernandez & Gatmaitan

105 Paseo de Roxas,
City of Makati, 1226
Metro Manila

Attention: Ernesto S. Taiño, Jr.

and
June Vee D. Monteclaro

Gentlemen :

This refers to your letter dated September 3, 1999 applying on behalf of your client, CIGNA
International Holdings, Ltd. (“CIHL”) for tax exemption on any gain that it may derive from its sale of
shares of stocks in a domestic corporation to CIGNA Global Holdings, Inc. (“CGHI”), pursuant to the
provisions of Article 14, paragraph (2) of the RP-US Tax Treaty. LibLex

It is represented that CIHL is a corporation organized and existing under the laws of the United
States and is not licensed to do business in the Philippines as evidenced by a Certificate of
Non-Registration issued by the Securities and Exchange Commission dated August 24, 1999; that CGHI is
a corporation also organized and existing under the laws of the United States and is not licensed to do
business in the Philippines as evidenced by a Certificate of Non-Registration issued by the Securities and
Exchange Commission dated August 24, 1999: that Philippine Health Care Providers, Inc. (the
"Corporation") is a corporation organized and existing under Philippine laws; that CIHL owned 59,996
shares in the Corporation with a par value of P100.00 each; that the shares owned by CIHL are broken
down as follows: 59,995 shares represented by stock certificate no. 080 and a qualifying share held in trust
by an individual stockholder for CIHL represented by stock certificate no. 087; that on July 2, 1999, CIHL
transferred the 59,995 shares owned by it in favor of CGHI and the one (1) share held in trust by Peter
Charles O'Connor transferred to Robert S. Fry.

In reply, please be informed that Article 14 of the RP-US Tax Treaty, states:

"ARTICLE 14

"(1) Gains from the alienation of tangible personal (movable) property forming part of the
business property of a permanent establishment which a resident of a Contracting State has in the
other Contracting State or of tangible personal (movable) property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the purpose of
performing independent personal services, including such gains from the alienation of such a
permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may
be taxed in the other State. However, gains derived by a resident of a Contracting State from the
alienation of ships, aircraft or containers operated by such resident in international traffic shall be
taxable only in that State, and gains described in Article 13 (Royalties) shall be taxable only in
accordance with the provisions of Article 13. cdll

"(2) Gains from the alienation of any property other than those mentioned in paragraph (1)
or in Article 7 (Income from Real Property) shall be taxable only in the Contracting State of which
the alienator is a resident.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 5
 On the other hand, the Reservation Clause of the RP-US Tax Treaty, in pertinent part, provides:

"Article I

(1) Notwithstanding the provisions of Article 14 relating to capital gains, both the United
States and the Philippines may tax gain from the disposition of an interest in a corporation if its
assets consists principally of real property interest located in that country. Likewise, both countries
may tax gain from the disposition of an interest in a partnership, trust or estate to the extent that the
gain is attributable to a real property interest in one of the countries. The term “real property interest”
is to have the meaning it has under the law of the country in which the underlying real property is
located. cdphil

Note that under the Reservation Clause, the Philippines may tax the gains derived from the
disposition of interests in a corporation if its assets consist principally of real property interest located in
the Philippines. "Principally" means more than 50% of the entire assets in terms of value (Sec. 2, Revenue
Regulations No. 4-86).

The value of the real property interest of the Corporation located in the Philippines as appearing in
its financial statements as of December 31, 1998 is only 21%, which is less than 50% of the value of its
total assets.

Such being the case, the gains which will be realized by CIHL from the sale of its shares of stock in
the "Corporation" to CGHI shall be taxable only in the United States pursuant to the aforequoted provision
of the RP-US Tax Treaty. Said gain will not be subject to Philippine income tax.

This ruling is being issued on the basis of the foregoing facts as represented and will be considered
null and void if upon investigation it will be disclosed that the facts are different. cdtai

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

December 23, 1999

ITAD RULING NO. 051-99

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 6
 Sec. 106 Sec. 108
ITAD #3-99 333-92

Royal Thai Embassy

107 Rada Street,
Legaspi Village,
Makati City

Attention: Ms. Aurapin Leelitham

Second Secretary

Gentlemen :

This refers to your letter dated December 3, 1999 requesting for a tax-free local purchase of one (1)
unit 1999 HONDA CRV 2.0 A/T Model, 5 door sedan, gas, 2.0li, PGM-FI, 4-speed automatic
transmission, 150 hp, Engine No. PEWD7-P204722, PADRD 1830XV104727, color heather mist silver
for the personal use of Ms. Aurapin Leetlitham, Second Secretary of the Royal Thai Embassy. LibLex

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods
and services

xxx xxx xxx

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) and ad valorem tax on its local purchases of vehicles. In other words, purchases by
that Embassy of vehicles shall be subject to the value added tax prescribed under Sections 106 and 108,
and ad valorem tax under Section 149, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemption to the Royal Thai
Embassy or its personnel on their local purchases of goods and/or services it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to the
Philippine Embassy and its personnel on their purchase of goods and services in your country.

Hence, the local purchase of one (1) unit HONDA CRV 2.0 A/T Model, for the personal use of Ms.
Aurapin Leetlitham of the Royal Thai Embassy is exempt from VAT and ad valorem taxes. (ITAD Ruling
3-99 dated July 8, 1999; BIR Ruling 333-92 dated October 27, 1992) LibLex

Very truly yours,

Commissioner of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 7
 By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

December 22, 1999

ITAD RULING NO. 050-99

RP-Japan Article 12
038-97 077-96

Sycip Gorres Velayo & Co.

3rd Floor, Insular Life Bldg.
Cor. Gorordo and Gen. Maxilom Avenue
Cebu City

Gentlemen :

This refers to your letter dated March 8, 1999, requesting for confirmation on behalf of NKC
Manufacturing Philippine Corporation (NPC) that its remittance of royalty payments to Nakanishi Metal
Works Co. Ltd. of Japan (NKC-J), is subject to the 25% income/withholding tax pursuant to the RP-Japan
Tax Treaty.

It is represented that NPC is a domestic corporation organized and existing under the laws of the
Republic of the Philippines with principal office at Mactan Economic Zone II, Lapu-lapu City, Cebu,
Philippines; that it is registered with the Philippine Economic Zone Authority (PEZA) under PEZA Board
Resolution No. 97-062 dated March 17, 1997; that it is a wholly-owned subsidiary of NKC-j, a
non-resident foreign corporation not engaged in business in the Philippines as shown by SEC
Certification dated April 20, 1998 and that it is organized and existing under the laws of Japan having its
principal office at 3-5, Tenmabashi 3-chome, Kitaku, Osaka, Japan; that on June 1, 1998, NKC-J and NPC
entered into a Royalty License Agreement duly registered with Intellectual Property Office of the
Department of Trade and Industry on April 8, 1997, whereby NKC-j grants to NPC the exclusive right to
use the Technical Information and Registered Trademark in the manufacture and sales of the licensed
products such as bearing retainer, rubber seal, core plate, sash roller, and other products relating to the
mentioned products; and that, in consideration for the foregoing premises NPC will pay to the NKC-J the
running royalty of 3% of sales prices of the Products sold in the Territory to third party other than NKC-J.
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 8
 LibLex

In reply, please be informed that Article 12 of the RP-Japan Tax Treaty, provides as follows:

"Article 12

"1. Royalties arising in a Contracting States and paid to a resident of the other
Contracting State may be taxed in that other Contracting State.

"2. However, such royalties may also be taxed in the Contracting State in which they
arise, and according to the laws of that Contracting State, but if the recipient is the beneficial
owner of the royalties the tax so charged shall not exceed:

(a) 15 per cent of the gross amount of the royalties if the royalties where are
paid in respect of the use of or the right to use cinematograph films and films or tapes for
radio or television broadcasting; cdll

(b) 25 per cent of the gross amount of the royalties in all other cases.

"3. ...

"4. The term "royalties" as used in this Article means payment of any kind received as
a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific
work including cinematograph films and films or tapes for radio or television broadcasting, any
patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right
to use, industrial, commercial, or scientific equipment, or for information concerning industrial,
commercial or scientific experience.”

Accordingly, your opinion that the royalty payments to be made by NPC to NKC-J is subject to the
preferential tax rate of 25% under the Article 12(2)(b) of the RP-Japan tax treaty to be withheld before
actual remittance to the latter, is hereby confirmed.

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. cdasia

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 9
 December 15, 1999

ITAD RULING NO. 049-99

RP-Japan Article 10 199-81

Precision Springs Cebu, Inc.

PEZA-Mactan, Pusok, Lapu-Lapu City
Mactan Island, Cebu Philippines

Attention: Edna L. Flores

Accounting Manager

Gentlemen :

This refers to your letter dated June 24, 1999 applying for a tax treaty relief on dividend payment
pursuant to Article 10 of the RP-Japan Tax Treaty.

It is represented that your company, Precision Springs Cebu, Inc. (Precision Cebu) is a non-pioneer
PEZA-registered enterprise operating in Mactan, Lapu-lapu City, Cebu; that Precision Spring Co., Ltd.
(Precision Japan), is a non-resident foreign corporation organized and existing under the laws of Japan,
with head office at Ichikawa City, Chiba Prefecture, Japan; that as of March 31, 1999 Precision Japan
owns 99.9% of the shares of Precision Cebu; that Precision Cebu’s Board of Directors declared cash
dividends as of March 31, 1999 amounting to Fifteen Million One Hundred Sixty Six Thousand Six
Hundred Sixty Six & 66/100 Pesos (PhP15,166,666.66) as evidenced by the Secretary’s Certificate dated
April 06, 1999 and Board Resolution (Resolution No. 01-99) signed in March 1999.

In reply, please be informed that Article 10 of the RP-Japan Tax Treaty provides:

"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 per cent either of the voting shares of the
company paying the dividends or of the total shares issued by that company during the

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 10
 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.

The provisions of this paragraph shall not affect the taxation of the company in
respect of the profits out of which the dividends are paid.

"(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 Precision Japan owns more than 25% of the stocks of Precision
Cebu, the cash dividends payable by Precision Cebu to Precision Japan are subject to 10% withholding
tax.

This ruling is being issued on the basis of the foregoing facts as represented and will be considered
null and void if upon investigation it will be disclosed that the facts are different.

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

December 9, 1999

ITAD RULING NO. 048-99

RP-Japan-Art. 11 142-95

Joaquin Cunanan & Co.

14th Floor, Multinational,
Bancorporation Centre,
6805 Ayala Avenue,
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 11
 1226 Makati City

Attention: Mr. Alexander B. Cabrera

Partner, Tax Services Department

Gentlemen :

This refers to your letter dated March 29, 1999, requesting confirmation of your opinion that the
interest payments of DAIHO PHILIPPINES INCORPORATED (DPI) on the two (2) short term loans
extended by the SUMITOMO BANK LTD. (SUMITOMO) are subject to the preferential tax rate of
fifteen percent (15%) pursuant to the RP-Japan Tax Treaty. cdlex

It is represented that SUMITOMO is a non-resident foreign corporation duly organized and existing
under the laws of Japan; that it is not registered either as a corporation/partnership in the Philippines as per
certification dated March 16, 1999 issued by the Securities and Exchange Commission (SEC); that the
Sumitomo Bank Limited registered with the SEC under License No. AF095000032 is a representative
office of SUMITOMO in the Philippines as per Certificate of Registration and License dated March 24,
1995 issued by the SEC; that the said representative office was established with the following functions: a)
collecting and analyzing the macro information on Philippines, b) reporting to the bank’s domestic and
overseas customers, helping said customers to invest in the Philippines and to search Philippine partner,
and c) preparing for the establishment of a branch or a subsidiary in the future; that DPI is a corporation
duly organized and existing under the laws of the Philippines; that on August 10, 1998, two (2) Loan
Agreements were entered into by and between DPI and SUMITOMO, whereby the former made a loan to
the latter in the amount of USD520,000.00 and USD250,000.00, both loans are subject to the payment of
interest at the rates of 7.0875% per annum and 6.93125% per annum, respectively.

In reply, please be informed that Article 11 of the RP-Japan Tax Treaty provides as follows:

"Article 11

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other Contracting State.

(2) However, such interest may also be taxed in the Contracting State in which it arises, and
according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
interest the tax so charged shall not exceed:

(a) 10 per cent of the gross amount of the interest if the interest is paid in respect of
Government securities, or bonds or debentures; cdlex

(b) 15 per cent of the gross amount of the interest in all other cases.

xxx xxx xxx

(5) The term “interest” as used in this Article means income from debt-claims of every kind,
whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from Government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or debentures.

xxx xxx xxx"

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 12
 Such being the case, the interest income to be remitted by DAIHO PHILIPPINES
INCORPORATED to SUMITOMO BANK LTD. relative to the aforementioned loans shall be subject to
the preferential tax rate of 15%. (as per BIR Ruling No. 142-95, dated September 13, 1995) cda

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,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

December 9, 1999

ITAD RULING NO. 047-99

RP-Japan Article 10
165-94

Rohm Electronics Philippines, Inc.

People's Technology Complex
Carmona 4116, Cavite, Philippines

Attention: Mr. Minoru Tabata

General Manager/Director

Gentlemen :

This is in connection with your letter dated September 21, 1999 requesting for the confirmation of
your opinion that the dividend remittances of ROHM ELECTRONICS PHILIPPINES, INC. (REPI) to
ROHM FUKUOKA COMPANY, LTD (ROHM FUKUOKA) is subject to the final withholding tax rate of

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 13
 ten per cent (10%) pursuant to the RP-Japan Tax Treaty. cda

It is represented that ROHM FUKUOKA is a non-resident foreign corporation duly organized and
existing under the laws of Japan, with principal office at 837-1, Hatakeda, Inado, Yukuhashi 824-8555
Japan; that ROHM FUKUOKA has no permanent establishment in the Philippines as evidenced by its
Certificate of Non-Registration from the Securities and Exchange Commission dated August 17, 1999; that
REPI is a domestic corporation duly registered with the Securities and Exchange Commission under
Certificate of Registration No. 168050 with office address at People's Technology Complex Carmona,
Cavite; that REPI is registered with the Board of Investment and was issued BOI Certificates of
Registration EP 89-1000, EP 93-075, EP 93-382, EP 99-014 and EP 99-015; that ROHM FUKUOKA
owns 80% of REPI; that on March 31, 1999 the Board of Directors of REPI passed and approved the
declaration of cash dividends in the total amount of Php 496,174,000.00 or Php 50.63 per share, in favor
of the stockholders of record as of March 31, 1999.

In reply, please be informed that Article 10 of the RP-Japan Tax Treaty provides viz:

"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 per cent 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) ...

(3) Notwithstanding the provisions of paragraph (2), the amount of tax imposed by the
Philippines on the dividends paid by a company, being a resident of the Philippines, registered with the
Board of Investments and engaged in preferred pioneer areas of investment under the investment
incentives laws of the Philippines to a resident of Japan, who is the beneficial owner of the dividends,
shall not exceed 10 per cent of the gross amount of dividends. LexLib

(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"

Accordingly, this Office hereby confirms your opinion that the dividend remittances by REPI to
ROHM FUKUOKA shall be subject to the preferential tax treaty rate of 10 per cent (10%). (BIR Ruling
165-94 dated December 5, 1994)

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

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 14
 void. cdll

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 15
 December 6, 1999

ITAD RULING NO. 046-99

RP-Japan Art. 10 037-95

Mitsuwa Philippines, Inc. (MPI)

Lot 4,6 & 8 Blk 22 Phase IV
Philippine Economic Zone
Rosario, Cavite

Attention: Ms. Josefina H. Maravillas

Asst. Department Manager
Accounting/Finance

Madam:

This refers to your letter dated August 2, 1999, requesting in behalf of Shonan Modeling Co. Ltd.
(SHONAN) for the availment of the preferential tax rate of 25% to be withheld on its dividend, pursuant to
the provisions of the RP Japan Tax Treaty.

It is represented that SHONAN is a corporation duly organized and existing under the laws of Japan;
that it is not registered either as a corporation/partnership nor licensed to do business in the Philippines as
per certification dated July 8, 1999 issued by the Securities and Exchange Commission; that it holds 20%
of the voting shares of Mitsuwa Philippines, Inc. (MPI), a domestic company organized and existing under
Philippine laws; that on June 18, 1999 the Board of Directors of MPI passed and adopted a resolution
declaring cash dividends equivalent to ten percent (10%) of the retained earnings to be paid to its
stockholders. cdphil

In reply, please be informed that Article 10 (Dividends) of the RP-Japan Tax Treaty provides, to
wit;

"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 per cent 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

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 16
 months immediately preceding the date of payment of the dividends; llcd

"(b) 25 per cent of the gross amount of the dividends in all other cases.

"The provisions of this paragraphs shall not affect the taxation of the company in
respect of the profits out of which the dividends are paid.

"3. ...

"4. The term "dividends" as used in the Article means income from shares or other rights,
not being debt-claims, participating in profits, as well as income from other corporate right
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

Accordingly, since Shonan holds only 20% of the voting shares of MPI, your application for a
preferential tax rate of 25% to be withheld on your dividend remittance to Shonan is hereby approved. (
BIR ruling No. 037-95 dated February 16, 1995). cdasia

This ruling is being issued on the basis of the 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.

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

December 2, 1999

ITAD RULING NO. 045-99

RP-Netherlands Article 12
BIR Ruling [DA-118-3-20-97]

Trevi Foundation Phils. Inc.

Unit 5-D Country Space 1 Building
Sen. Gil Puyat Ave., Salcedo Village
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 17
 Makati City, Philippines

Attention: Mr. Aurelio Leonetti

VP-Finance

Gentlemen :

This is in connection with your application for relief from double taxation dated March 25, 1999,
on behalf of TREVI CONTRACTORS BV, requesting for a preferential tax rate of 15% to be withheld on
royalty remittances by your client, TREVI FOUNDATIONS PHILS. INC., pursuant to the RP-Netherlands
Tax Treaty. LexLib

It is represented that TREVI CONTRACTORS BV is a non-resident foreign corporation duly

organized and existing under the laws of Netherlands, with principal office at Fred. Roeskestraat 123, 1st
Floor, 1076 EE Amsterdam, The Netherlands; that TREVI CONTRACTORS BV has no permanent
establishment in the Philippines as evidenced by the Certificate of Non-Registration from the Securities
and Exchange Commission dated March 23, 1999; that TREVI CONTRACTORS BV entered into a
"License and Service Agreement" with TREVI FOUNDATIONS PHILS. INC., a corporation duly
registered with the Securities and Exchange Commission with office address at Unit 5-D Country Space 1
Building, Sen. Gil Puyat Ave., Salcedo Village, Makati City; that in the said agreement TREVI
CONTRACTORS BV granted TREVI FOUNDATION PHILS. INC. the license to use the "TREVI Rights"
which, shall mean the use of intellectual property rights related to the trade-name "TREVI" and the
provision for a technical assistance service; and in consideration of the said services TREVI
FOUNDATION PHILS. INC. shall pay TREVI CONTRACTORS BV an amount equivalent to 12.5% of
TREVI FOUNDATION PHILS. INC.'s net sales; and that the "License and Service Agreement" is duly
registered with the Intellectual Property Office of the Department of Trade and Industry under Certificate
of Registration No. 2054 dated November 27, 1997.

In reply, please be informed that Article 12 of the Philippine-Netherlands Tax Treaty, provides, viz:

"Article 12

"1) Royalties arising in one of the States and paid to a resident of the other State may be
taxed in that other State.

"2) However, such royalties may also be taxed in the State in which they arise, and according
to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged
shall not exceed:

"(a) 10 per cent of the gross amount of the royalties where the royalties are paid by an
enterprise registered, and engaged in preferred areas of activities in that State; and

"(b) 15 per cent of the gross amount of the royalties in all other cases.

xxx xxx xxx

"4) The term "royalties" as used in this Article means payment of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films or tapes for radio or television broadcasting, any patent, trademark,
design or model, plan, secret formula or process, or for the use of, or the right to use, industrial,

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 18
 commercial, or scientific equipment, or for information concerning industrial, commercial or
scientific experience. prcd

xxx xxx xxx"

In view thereof, your application for tax treaty relief is hereby approved at the final withholding tax
rate of fifteen per cent (15%) of the gross amount of the royalties. (BIR Ruling [DA-118-3-20-97])

However, TREVI FOUNDATIONS PHILS. INC. shall be responsible for the payment of
value-added tax on such rentals and/or royalties in behalf of TREVI CONTRACTORS BV by filing a
separate VAT declaration/return pursuant to Section 4.102-1(b) of Revenue Regulations No. 7-95.

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. llcd

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 25, 1999

ITAD RULING NO. 044-99

RP-Japan Article 10
165-94

Software Ventures
International Corporation
6F The JMT Corporate Condominium
ADB Avenue, Pasig City

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 19
 Attention: Marizon B. Esquela
Manager

Gentlemen :

This refers to your application for relief from double taxation dated October 19, 1999 on behalf of
your investor, JAPAN ASIA INVESTMENT COMPANY LIMITED (JAIC), that the dividends paid by
SOFTWARE VENTURES INTERNATIONAL CORPORATION (SVIC) shall be subject to 25% withholding
tax pursuant to Article 10 of the RP-Japan Tax Treaty. llcd

It is represented that JAIC is a corporation organized and existing under the laws of Japan with
office address at 7th Floor, Kojimachi Tsuruyahachiman Building, 4 Kojimachi 2-Chome, Chiyoda-ku
Tokyo, Japan 102-0083; that JAIC has no branch or permanent establishment in the Philippines as
evidenced by the Certificate of Non-Registration of Corporation issued by the Securities and Exchange
Commission on August 26, 1999; that JAIC owns the following shares of stock of SVIC:
P1.00/Share
Stockholder No. of Shares % of Ownership
JAIC-P1B INVESTMENT FUND 1,284,200 4.64%
JAIC-P2A INVESTMENT FUND 733,700 2.65%
JAIC-P2B INVESTMENT FUND 733,700 2.65%;
that SVIC is a domestic corporation with office address at 6/F The JMT Corporate Condominium, ADB
Avenue, Pasig City and registered with the Board of Investments with registration No. EP-95-105; that the
SVIC's Board of Directors in a regular meeting held on June 10, 1996, September 6, 1996, March 14,
1997, June 17, 1997 and March 20, 1998 resolved that a cash dividend amounting to Fifteen Million Three
Hundred Forty Thousand Seven Hundred Pesos (P15,340,700.00), Twelve Million Pesos (P12,000,000.00)
and Sixty Four Million Pesos (P64,000,000.00) be declared to all stockholders.

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. cdlex

"(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 the 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 per cent 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.

The provisions of this paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 20
 "(3) Notwithstanding the provisions of paragraph (2), the amount of tax imposed by the
Philippines on the dividends paid by a company, being a resident of the Philippines, registered with
the Board of Investment and engaged in preferred pioneer areas of investment under the investment
incentives laws of the Philippines to a resident of Japan, who is the beneficial owner of the dividends,
shall not exceed 10 per cent of the gross amount of the dividends." LexLib

"(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, your application that the preferential rate to be withheld by SVIC on its
dividend remittances to JAIC is 25% is hereby approved considering that SVIC though BOI registered is
not engaged in preferred pioneer areas of investment.

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. Cdpr

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 9, 1999

ITAD RULING NO. 043-99

Section 106
Section 108
206-93

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 21
 Embassy of the Socialist Republic of Vietnam
Manila, Philippines

Gentlemen :

This refers to your Note No. 62-VN/99 dated September 29, 1999, which was referred to this Office
by the Department of Foreign Affairs requesting for the issuance of a Tax Exemption Certificate on the
purchase of Budweiser Beer and other imported goods. cdlex

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services

xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value-added tax (VAT) on its local purchase of goods and services. In other words, purchase by the
Embassy of the Socialist Republic of Vietnam of goods and/or services shall be subject to the value-added
tax prescribed under Section 106 and 108, both of the National Internal Revenue Code of 1997. cdtai

However, under the principle of reciprocity, this Office may grant tax exemption to your embassy
or its personnel on their local purchase of goods and/or services it appearing from the list submitted by the
Department of Foreign Affairs dated October 4, 1999 that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country (BIR Ruling 206-93
dated May 11, 1993).

Hence, the Embassy of the Socialist Republic of Vietnam is entitled to VAT exemptions on their
local purchase of goods and/or services. cdtai

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 22
 November 3, 1999

ITAD RULING NO. 042-99

RP-Netherlands Article 11
057-97

Joaquin Cunanan & Co.

14th Floor Multinational Bancorporation Center Building
6785 Ayala Avenue, Makati City

Attention: Mr. Alexander B. Cabrera

Partner

Gentlemen :

This refers to your letter dated May 4, 1999 requesting confirmation of your opinion that the
interest payments of EL PASO PHILIPPINES HOLDING COMPANY, INC. (EPPH) to HOLLANDSCHE
BANK-UNIE N.V. (HBU) is subject to the preferential tax treaty rate of 10% withholding tax pursuant to
the RP-Netherlands Tax Treaty.

It is represented that HBU is a non-resident foreign corporation organized and existing under the
laws of the Netherlands; that HBU has no permanent establishment in the Philippines as evidenced by
Certificate of Non-Registration issued by the Securities and Exchange Commission dated April 27, 1999;
that EPPH is a corporation duly organized and existing under the laws of the Philippines; that on January
27,1999, EPPH obtained a dollar denominated loan from HBU amounting to US$52,500,000.00; that said
loan will be used mainly to finance the acquisition of shares in East Asia Power Resources Corporation;
that the said loan is subject to the payment of interest at the rate equal to LIBOR plus 4% margin per
annum. cdtai

In reply, please be informed that under Article 11 of the RP-Netherlands Tax Treaty, provides, viz:

"Article 11

INTEREST

1. Interest arising in one of the States and paid to a resident of the other State may be taxed
in that other State.

2. However, such interest may also be taxed in the State in which it arises and according to
the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall
not exceed:

a) 10 per cent of the gross amount if such interest is paid:

(i) in connection with the sale on credit of any industrial, commercial or

scientific equipment, or

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 23
 (ii) on any loan of whatever kind granted by a bank, or any other financial
institution,

(iii) in respect of public issues of bonds, debentures or similar obligations.

b) 15 per cent of the gross amount of the interest in all other cases.

3. ...

4. ...

5. The term "interest" as used in this Article means income from Government securities,
bonds or debentures, whether or not secured by mortgage but not carrying a right to participate in
profits, and debt-claims of every kind as well as all other income assimilated to income from money
lent by the taxation law of the State in which the income arises. Penalty charges for late payment
shall not be regarded as interest for the purpose of this Article."

Accordingly, your opinion that interest payment made by EPPH to HBU are subject only to the
10% preferential tax rate is hereby confirmed. (BIR Ruling No. 057-97 dated May 15, 1997) cda

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.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 3, 1999

ITAD RULING NO. 041-99

RP-Japan Article 12
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 24
 ITAD # 20-99
KDK International (Phils.) Corporation
11-A Harmony St. cor. Eleven Road,
Grace Village, Balintawak, Quezon City

Attention: Ng Siong Chi

Vice-President

Gentlemen :

This refers to your application for relief from double taxation dated October 4, 1999 on behalf of
MATSUSHITA SEIKO CO. LTD. (MATSUSHITA), requesting for a preferential tax rate of ten percent
(10%) to be withheld on dividend remittances by KDK INTERNATIONAL (PHILS.) CORPORATION
(KDK), pursuant to the RP-Japan Tax Treaty. cdphil

It is represented that MATSUSHITA is a non-resident foreign corporation duly organized and

existing under the laws of Japan; that it is not registered either as a corporation/partnership in the
Philippines as per certification dated March 4, 1999 issued by the Securities and Exchange Commission;
that KDK is a corporation duly organized and existing under the laws of the Philippines; that
MATSUSHITA holds forty percent (40%) of the capital stock of KDK; that on June 30, 1999, the Board
of Directors of KDK passed and approved the declaration of cash dividend in the amount of One Million
Three Hundred Thousand Pesos (P1,300,000.00), payable to the stockholders of record as of August 30,
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. cdtai

"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 per cent 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; Cdpr

xxx xxx xxx

"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 MATSUSHITA SEIKO CO., LTD. holds forty per cent (40%)

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 25
 of the capital stock of KDK INTERNATIONAL (PHILS.) CORPORATION, your application is hereby
approved. Hence, the preferential tax rate to be withheld by KDK on its dividend remittances to
Matsushita is ten per cent (10%).(BIR Ruling No. ITAD 20-99)

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. LexLib

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 3, 1999

ITAD RULING NO. 040-99

RP-JAPAN Article 11 142-95

Sankou Seiki Co., Ltd. Inc.

Lot 8 Blk 14 Phase 3
Cavite Economic Zone (CEZ)
Rosario, Cavite

Attention: Mr. Tsutomu Seki

President and CEO

Gentlemen :

This refers to your letter dated May 19, 1999, requesting in behalf of your parent company, Sansui
Seiki Co., Ltd. (SANSUI) for the availment of the preferential tax rate of 15% on its interest income
pursuant to the provisions of the RP-Japan Tax Treaty.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 26
 It is represented that SANSUI is a limited company duly organized and existing under the laws of
Japan; that it is not registered as a corporation/partnership in the Philippines as per certification dated May
7, 1999 issued by the Securities and Exchange Commission; that Sankou Seiki Co., Ltd. (SANKOU) is a
domestic company organized and existing under Philippine laws; that by virtue of the Loan Agreements
made by and between SANSUI and SANKOU dated April 15, 1996, April 30, 1996 and November 15,
1998, the latter in effect borrowed from the former the amounts of JPY70,000,000 and JPY171,897,239
both for plant and machinery acquisition and the amount of JPY50,000,000 as a working fund; that all of
the aforementioned loans are subject to the payment of interest. prcd

In reply, please be informed that paragraph 2, Article 11 of the RP- Japan Tax Treaty, provides as
follows:

"Article 11

"(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other Contracting State.

"(2) However, such interest may also be taxed in the Contracting State in which it arises, and
according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
interest the tax so charged shall not exceed:

"(a) 10 percent of the gross amount of the interest if the interest is paid in respect of
Government securities, or bonds or debentures;

"(b) 15 percent of the gross amount of the interest in all other cases." cdphil

xxx xxx xxx

"(5) The term "interest" as used in this Article means income from debt-claims of every kind,
whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from Government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or debentures.

xxx xxx xxx"

Such being the case, the interest income to be remitted by Sankou Seiki Co., Ltd. to Sansui Seiki
Co., Ltd. relative to the aforementioned loan shall be subject to the preferential tax rate of 15% Philippine
income tax based on the gross amount of the interest ( as per BIR Ruling No. 142-95, dated 13 September
1995).

This ruling is being issued on the basis of the 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. cdtai

Very truly yours,

Commissioner of Internal Revenue

By:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 27
 (SGD.) SIXTO S. ESQUIVIAS IV
Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 3, 1999

ITAD RULING NO. 039-99

RP-Japan, Arts. 12 & 15 Sec. 108 134-96 044-97 069-96

Castillo Laman Tan Pantaleon and San Jose

Law Offices
The Valero Tower
# 122 Valero St., Salcedo Village
1277 Makati City

Attention: Atty. Virginia B. Viray

and
Atty. Dina D. Lucenario

Gentlemen :

This is in connection with your application for relief from double taxation dated May 29, 1998, on
behalf of your client, Rohm Mechatech Co. Ltd. (RMC), requesting for a preferential tax rate of ten
percent (10%) to be withheld on the royalty remittances by Rohm Mechatech Philippines, Inc. (RMP),
pursuant to the RP-Japan Tax Treaty. LexLib

It is represented that RMC is a corporation organized and existing under the laws of Japan with no
permanent establishment in the Philippines, as per certification dated June 9, 1998 issued by the Securities
and Exchange Commission; that RMP, a BOI-registered pioneer corporation organized and existing under
the laws of the Philippines under Certificate of Registration No. EP93-432, entered into a Consulting
Agreement with RMC, whereby RMC shall render the following consulting services upon request of
RMP: (1) consulting services for the technical management or administration of any scientific, industrial
or commercial undertaking; (2) consulting services for the management and / or administration of
business; (3) consulting services for the management of personnel; (4) consulting services for the
management of funds; (5) consulting services relating to safety and health; and other consulting services
which are necessary or incidental to any of the foregoing items; that RMC shall send members of its staff
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 28
 to the Philippines, upon RMP's request, for the purpose of providing the said consulting services; that in
consideration of said services, RMP shall pay RMC an initial fee in the amount 23,082,424.83, and
thereafter an amount equivalent to three percent (3%) of the gross sales of RMP as running consulting fee,
which is subject to review; and that the said Consulting Agreement is duly registered with the Intellectual
Property Office of the Department of Trade and Industry under Certificate of Compliance No.
5-1998-00037 dated June 5, 1998.

In reply, please be informed that Article 12 of the RP-Japan Tax Treaty provides, viz:

"ARTICLE 12

"1. Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other Contracting State. cdphil

"2. However, such royalties may also be taxed in the Contracting State in which they arise,
and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
royalties the tax so charged shall not exceed:

(a) 15 per cent of the gross amount of the royalties if the royalties are paid in respect
of the use of or the right to use cinematograph films and films or tapes for radio or television
broadcasting;

(b) 25 per cent of the gross amount of the royalties in all other cases.

"3. Notwithstanding the provisions of paragraph 2, the amount of tax imposed by the
Philippines on the royalties paid by a company, being a resident of the Philippines, registered with the
Board of Investments and engaged in preferred pioneer areas of investment under the investment
incentives laws of the Philippines to a resident of Japan, who is the beneficial owner of the royalties,
shall not exceed 10 per cent of the gross amount of the royalties.

"4. The term ‘royalties’ as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
including cinematographic films and films or tapes for radio or television broadcasting, any patent,
trade mark, design or model, plan, secret formula or process, or for the use of, the right to use,
industrial, commercial or scientific equipment, or for information concerning industrial, commercial
or scientific experience. (Emphasis supplied)

xxx xxx xxx"

Applying the foregoing provisions, and inasmuch as the Consulting Agreement between RMC and
RMP has been approved by the Intellectual Property Office of the Department of Trade and Industry, and
that RMP is a BOI-registered pioneer corporation, this Office hereby confirms that the consulting fees
arising in the Philippines and payable to RMC by RMP are subject to the preferential royalty tax rate of
10%.(BIR Ruling No. 134-96)

Moreover, Article 15 of the same Treaty provides that:

"ARTICLE 15

"1. Subject to the provisions of Article 16, 18, 19, 20 and 21, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an employment shall be
taxable only in that Contracting State unless the employment is exercised in the other Contracting

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 29
 State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in
that other Contracting State. cdlex

"2. Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a

Contracting State in respect of an employment exercised in that other Contracting State shall be
taxable only in the first-mentioned Contracting State if:

(a) the recipient is present in that other Contracting State for a period or periods not
exceeding in the aggregate 183 days in the calendar year concerned, and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of
that other Contracting State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which
the employer has in that other Contracting State.

xxx xxx xxx"

Thus, the salaries, wages or similar remuneration which will be derived by the staff of RMC in the
Philippines in the performance of the services under the said Agreement may not be subject to Philippine
income tax provided the conditions set forth in the foregoing Article are present or complied with.
Otherwise, the said income shall be subject to the rate of tax provided for under Section 25 (A) of Tax
Code of 1997 on nonresident alien engaged in trade or business within the Philippines. (BIR Ruling Nos.
044-97 & 069-96)

Furthermore, under Section 108 of the said Code, the royalty payments to be remitted by RMP is
subject to the 10% value-added tax. Section 4.102-1 (b) of Revenue Regulations No. 7-95 provides that:

"The VAT on rental and/or royalties payable to non-resident foreign corporations or owners
for the sale of services and use or lease of properties in the Philippines shall be based on the contract
price agreed upon by the licensor and the licensee. The licensee shall be responsible for the payment
of VAT on such rentals and/or royalties in behalf of the non-resident foreign corporation or owner by
filing a separate VAT declaration/return for this purpose. The duly validated VAT declaration/return
is sufficient evidence in claiming input tax credit by the licensee." LexLib

In view of all the foregoing, RMP shall be responsible for the withholding of income tax at the rate
of 10% and the value-added tax at the rate of 10%, both based on its royalty remittances to RMC, pursuant
to the said Agreement.

This ruling is issued based on the foregoing facts as represented. If upon investigation, it will be
disclosed that the said facts are different, then this ruling shall be considered null and void. llcd

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 30
 Legal and Enforcement Group
Bureau of Internal Revenue

November 3, 1999

ITAD RULING NO. 038-99

RP-Netherlands Art. 5; Art. 7

Sec. 28, 105, 108 (A) (2)
049-96

SyCip Gorres Velayo & Co.

3rd Floor Insular Life Bldg.
cor Gorordo and Gen. Maxilom Avenues
Cebu City

Attention: Atty. Lauris L. Dela Peña

Tax Division

Gentlemen :

This refers to your letter dated April 27, 1999 requesting on behalf of Van Seumeren (Philippines)
Inc. (VSPI) for a confirmation of your opinion that the remittances of VSPI to Van Seumeren Holland
B.V. (VSH) of rental payments for the use of one (1) unit 250 Crawler Crane be exempt from withholding
tax pursuant to Article 5 and Article 7 paragraph (1) of the RP-Netherlands Tax Treaty. Cdpr

It is represented that VSPI is a domestic corporation organized and existing under the laws of the
Republic of the Philippines with principal office at PDI Condominium, Archbishop Reyes Avenue, Cebu
City; that VSH is a non-resident foreign corporation not engaged in business in the Philippines, as
evidenced by a certification issued by the Securities and Exchange Commission dated May 6, 1999; that it
has its principal office at Molensteyn 3454 ZG DE MEERN, the Netherlands; that VSPI is engaged in the
leasing of cranes, specialized equipment for heavy lifting and transportation for onshore and offshore
industries on a turnkey basis and sea transportation thereof or any services related thereto or connected
therewith; that to augment the machineries and equipment being leased by VSPI, it entered into a Lease
Agreement with VSH for the lease of one (1) unit Crawler Crane; that in consideration thereof, VSPI shall
pay rental payments of US$23,650 per month or US$5,500 weekly beginning December 1, 1998.

In reply thereto, I have the honor to inform you that paragraph (1) Article 7 and Article 5 of the
RP-Netherlands Tax Treaty provides as follows:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 31
 "Article 7"

"BUSINESS PROFITS

"1. The profits of an enterprise of one of the States shall be taxable only in that State unless
the enterprise carries on business in the other State through permanent establishment situated therein.
If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the
other State but only so much of them as is attributable to that permanent establishment." cdtai

xxx xxx xxx

"Article 5

"PERMANENT ESTABLISHMENT

"1. For purposes of this Convention, the term "permanent establishment" means a fixed
place of business in which the business of the enterprise is wholly or partly carried on.

"2. The term "permanent establishment" includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, quarry or other place of exploration or extraction of natural resources;

(g) a building site or construction or assembly project or supervisory activities in

connection therewith, where such site, project or activity continues for a period of more than
183 days;

(h) the furnishing of services including consultancy services by an enterprise

through an employee or other personnel where activities of that nature continue (for the same
or a connected project) for a period or periods exceeding in the aggregate 183 days within any
twelve-month period." cdphil

"3. ...

"4. ...

"5. ...

"6. ...

"7. ...

Considering that VSH does not have a permanent establishment in the Philippines to which its
business profits/income is attributable, payments received by it under its contract with VSPI are not

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 32
 subject to Philippine income tax/withholding tax prescribed under Section 28 of the Tax Code of 1997.

However, said rental payments made by VSPI to VSH for the lease of one (1) unit Crawler Crane
shall be subject to the 10% VAT imposed under Sec. 108 (A)(2) in relation to Sec. 105 of the Tax Code of
1997, based on the contract price agreed upon by the parties. VSPI, being the licensee, shall be responsible
for the payment of VAT on such rentals in behalf of VSH by filing a separate VAT declaration/return. The
said VAT declaration/return can be used by your client as evidence in claiming input tax credit. (BIR
Ruling 049-96 dated April 11, 1996; Sec. 4.102-1(b) Revenue Regulations No. 7-95)

This ruling is being issued on the basis of the foregoing facts as represented and will be considered
null and void if upon investigation it will be disclosed that the facts are different.

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 3, 1999

ITAD RULING NO. 037-99

RP-Singapore-Art. 10 (2) (a) 010-84

Cape East Philippines, Inc.

Tolentino Road
Sitio Centro, Kumintang Ibaba
Batangas City

Attention: Mr. Edwin V . Alea

Accountant

Gentlemen :

This refers to your application for relief from double taxation dated March 16, 1999 on behalf of
Cape East Pte. Ltd. (CapeSingapore) requesting for a preferential tax rate of fifteen percent (15%) to be
withheld on dividend remittances by Cape East Philippines, Inc. (CapePhilippines) pursuant to the
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 33
 RP-Singapore Tax Treaty. cdtai

It is represented that CapeSingapore is a non-resident foreign corporation duly organized and

existing under the laws of Singapore; that it is not registered either as a corporation/partnership in the
Philippines as per certification dated March 10, 1999 issued by the Securities and Exchange Commission
(SEC); that it owns 99.9905% of the issued and outstanding capital stock of CapePhilippines, a domestic
corporation duly organized and existing under the laws of the Philippines; and that on June 15, 1998, the
Board of Directors of CapePhilippines passed and approved a resolution declaring from its surplus profits
a dividend of two hundred eighty four pesos (P284.00) per share on the common stock payable on October
30, 1998, to holders of record of the said stock at the close of business on June 30, 1998.

In reply, please be informed that Article 10 (2)(a) of the RP-Singapore Tax Treaty provides, as
follows:

"Article 10

Dividends

"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 State.

2. However, such dividends may be taxed in the Contracting State of which the company
paying the dividends is a resident, and according to the law of that State, but if the recipient is the
beneficial owner of the dividends the tax so charged shall not exceed:

a) 15 per cent of the gross amount of the dividends if the recipient is a company
(including partnership) and during the part of the paying company’s taxable year which
precedes the date of payment of the dividend and during the whole of its prior taxable year (if
any), at least 15 per cent of the outstanding shares of the voting stock of the paying company
was owned by the recipient company; and llcd

b) in all other cases, 25 per cent of the gross amount of the dividends.

xxx xxx xxx"

Considering that CapeSingapore owns 99.9905% of the outstanding shares of the voting stock of
CapePhilippines, the dividends issued by the latter are subject to 15% withholding tax under the
afore-mentioned provision of the RP-Singapore Tax Treaty. (BIR Ruling No. 010-84)

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. cdll

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 34
 Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

November 3, 1999

ITAD RULING NO. 036-99

RP-Japan, Art. 12
Sec. 108, NIRC 095-99

MITSUBA Philippines Corporation

Lot 1, Block 14, Phase II
First Cavite Industrial Estate
Brgy. Langkaan, Dasmariñas, Cavite

Attention: Ms. Marlene Lingat-Besa

Accounting Officer

Gentlemen :

This is in connection with your application for relief from double taxation dated January 25, 1999,
requesting for a preferential tax rate of twenty five percent (25%) to be withheld on the remittances of
royalty fee by Mitsuba Philippines Corporation (MPC) to Mitsuba Corporation-Japan (MITSUBA),
pursuant to the RP-Japan Tax Treaty. cda

It is represented that MITSUBA is a corporation organized and existing under the laws of Japan
with no permanent establishment in the Philippines, as per certification dated August 20, 1998 issued by
the Securities and Exchange Commission; that MPC is duly registered as an Ecozone Export Enterprise
pursuant to R.A. 7916 at the Cavite Ecozone; that on March 31, 1998 MPC and MITSUBA entered into a
Consultation Agreement, whereby MITSUBA will provide services to MPC relating to advises of
managing for personnel department, advises for accounting/settlement/funds raising, control department
and any advises for managing the company related on proceedings; that in consideration for the said
services, MPC shall pay MITSUBA consultation fee amounting to US$14,000.00 for every month; and
that the Consultation Agreement is duly registered with the Intellectual Property Office of the Department
of Trade and Industry under Certificate of Compliance No. 5-1998-00067 dated March 31, 1998.

In reply, please be informed that Article 12, paragraphs 1, 2 and 4 of the RP-Japan Tax Treaty
provides, viz.:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 35
 "ARTICLE 12

"(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other Contracting State.

"(2) However, such royalties may also be taxed in the Contracting State in which they arise,
and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
royalties, that tax so charged shall not exceed:

a) 15 per cent of the gross amount of the royalties if the royalties are paid in respect
of the use of or the right to use cinematograph films and films or tapes for radio or television
broadcasting; LibLex

b) 25 per cent of the gross amount of the royalties in all other cases.

xxx xxx xxx

"(4) The term "royalties" as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films and films or tapes for radio or television broadcasting, any patent,
trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for information concerning industrial, commercial
or scientific experience. (Emphasis supplied)"

Inasmuch as the Consultation Agreement between MPC and MITSUBA has been approved by the
Intellectual Property Office of the Department of Trade and Industry, this Office hereby confirms your
opinion that the royalty fee arising in the Philippines and payable by MPC to MITSUBA is subject to a tax
rate of 25% on the gross amount of the royalty as prescribed under Article 12 (2)(b) of the RP-Japan Tax
Treaty. [BIR Ruling No. 095-99 dated September 14, 1999] Cdpr

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.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 36
 October 18, 1999

ITAD RULING NO. 035-99

Sec 106 Sec 108

[DA-448-99]

Embassy of the United States of America

Metro Manila, Philippines

Attention: Mr. Dan Larsen

First Secretary

Gentlemen :

This refers to your letter dated September 17, 1999 requesting for exemption from value added tax
(VAT) on the purchase of one (1) unit of HYUNDAI STAREX RV SVX, for the personal use of Mr. Dan
Larsen, First Secretary, Embassy of the United States of America. cdrep

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services cda

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106
and 108, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of
the United States of America or its personnel on their local purchases of goods and/or services it appearing
from the list submitted by the Department of Foreign Affairs that your Government allows similar
exemption to Philippine Embassy personnel on their purchase of goods and services in your country.

Hence, the local purchase of one (1) HYUNDAI STAREX RV SVX, for the personal use of Mr.
Dan Larsen is exempt from VAT. LexLib

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 37
 Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

October 18, 1999

ITAD RULING NO. 034-99

Sec 106 Sec 108

[DA-448-99]

US Embassy
Makati City, Metro Manila

SUBJECT : Purchase of Car by Mr. John Patrick Caulfield First Secretary-US Embassy

Gentlemen :

This refers to BIR-ITAD Ruling No. 34-99 dated October 18, 1999 confirming the tax exemption
on the purchase of one (1) unit Honda CRV 2.0 A/T, 1999 Model for the personal use of Mr. John Patrick
Caulfield, First Secretary, Embassy of the United States of America. cdrep

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 38
 services

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) and ad valorem taxes on its local purchases of goods and services. In other words,
purchases by that Embassy of goods and/or services shall be subject to the value added tax prescribed
under Sections 106 and 108, and ad valorem tax under Section 149, both of the National Internal Revenue
Code of 1997. cdll

However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of
the United States of America or its personnel on their local purchases of goods and/or services it appearing
from the list submitted by the Department of Foreign Affairs that your Government allows similar
exemption to Philippine Embassy personnel on their purchase of goods and services in your country.

Hence, the local purchase of one (1) Honda CRV '99 2.0 A/T, for the personal use of Mr. John
Patrick Caulfield is exempt from VAT and ad valorem taxes. (BIR Memo dated June 19, 1994; BIR Ruling
333-92 dated October 27, 1992) LibLex

Very truly yours,

(SGD.) RAYMUND S. GALLARDO

Chief, International Tax Affairs Division
Bureau of Internal Revenue

October 7, 1999

ITAD RULING NO. 033-99

Sec. 106 Sec. 108

206-93 087-97

Embassy of Finland
21st Floor, Far East Bank and Trust Center,
Sen. Gil Puyat Avenue corner
Makati Avenue, Makati City

Gentlemen :

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 39
 This refers to your letter dated February 22, 1999, to the Department of Foreign Affairs (DFA),
regarding the request of the Embassy of Finland for a Certification of Value-added Tax (VAT) Exemption.
cdtai

In reply, please be informed that while Article 34 of the Vienna Convention on Diplomatic
Relations of 1961 exempts diplomatic agents from all dues and taxes, personal or real, national, regional
or municipal, they are nevertheless subject to the indirect taxes of a kind which are normally incorporated
in the price of goods or services, e.g., ad valorem tax and VAT. However, under the principle of
reciprocity, this Office may grant tax exemption to the embassy of a foreign state and to the members of
diplomatic missions on their local purchases of goods and services, provided that they can submit to the
Commissioner of Internal Revenue or his duly authorized representative a copy of the special legislation or
international agreement showing that the said foreign government allows similar tax exemptions to the
Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. (BIR
Ruling No. 206-93 dated May 11, 1993) cdrep

However, as per the letter dated February 1, 1999 submitted by the Office of Protocol of the DFA
to this Office, Finland is not included among the list of diplomatic missions entitled to VAT exemption in
the Philippines on the basis of reciprocity.

This considering, it is required that a DFA certification to the effect that indirect tax (e.g. VAT)
exemption is granted to the members of diplomatic missions of the Philippines in Finland be secured,
before the same privilege of exemption from payment of VAT be accorded the members of Finland’s
diplomatic missions in the Philippines. (BIR Ruling 087-97 dated August 5, 1997) cdphil

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

October 7, 1999

ITAD RULING NO. 032-99

RP-Netherlands Article 10 000-00

Unilever Philippines, Inc

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 40
 1351 United Nations Avenue
Manila, Philippines

Attention: Ms. Anna Maria B. Torres

Senior Financial Accountant

Madam:

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

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 41
 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
Bureau of Internal Revenue

October 7, 1999

ITAD RULING NO. 031-99

Article 11, RP-US Tax Treaty

Article 10, RP-Singapore Tax Treaty
Article 1 & 3, RP-UK Tax Treaty
044-82

Maria Corazon B. Esquela

Manager
Software Ventures International
6/F, The JMT Corporate Condominium
ADB Avenue, Ortigas Center
Pasig City 1600

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 42
 Madam:

This refers to your application for relief from double taxation dated May 31, 1999, on behalf of
Pacven Walden Ventures III, L.P. (PWV), O W & W Pacrim Investments Limited (OWW), Info Tech
Ventures Limited (ITV), Nikko Pacven Walden Ventures Limited (NPW), and Sino-French Capital
Investment Co. (SFC), requesting for a preferential tax rate to be withheld on your dividend remittances,
pursuant to the RP-US, RP-Singapore, and RP-UK Tax Treaties. cdrep

It is represented that Software Ventures International Corporation (SVI) is a corporation organized

and existing under the laws of the Philippines, and is registered with the Board of Investments as per
Certificate of Registration No. EP 98-158 dated November 26, 1998; that during the regular meeting of
SVI's Board of Directors held on December 3, 1998, it was resolved that the portion of the 1998
unrestricted retained earnings be declared as cash dividends to all stockholders; that PWV, OWW, ITV,
NPW, and SFC are stockholders of SVI as of December 31, 1998, and their respective percentage of
ownership are as follows: 10.86%, 1.48%, 0.47%, 2.008%, and 1.35%; that PWV is a limited partnership
existing and organized under the laws of the State of Delaware, USA, with business address at 32
Loockerman Square, Suite C-100, Dover, Delaware, USA; that OWW and ITV are corporations organized
and existing under the laws of Singapore, with business addresses at 20 Raffles Place, #17-00 Ocean
Towers, Singapore, and 396 Alexandra Road, #16-03 BP Tower, Singapore, respectively; that NPW and
SFC are corporations organized and existing under the laws of the Cayman Islands, British West Indies,
with business addresses at Ugland House, South Church Street, Grand Cayman, Cayman Islands, British
West Indies, and George Town, Grand Cayman, Cayman Islands, British West Indies, respectively; and
that PWV, OWW, ITV, NPW, and SFC have no permanent establishment in the Philippines as per the
certifications issued by the Securities and Exchange Commission. cdll

In reply, please be informed of the following:

I. FOR PWV:

Article 11 of the RP-US Tax Treaty provides, viz:

"Article 11

"DIVIDENDS

"(1) Dividends derived from sources within one of the Contracting States by a resident of the
other Contracting State may be taxed by both Contracting States.

"(2) The rate of tax imposed by one of the Contracting States on dividends derived from
sources within that Contracting State by a resident of the other Contracting State shall not exceed:

(a) 25 percent of the gross amount of the dividend; or

(b) When the recipient is a corporation, 20 percent of the gross amount of the
dividend if during the part of the paying corporation's taxable year which precedes the date of
payment of the dividend and during the whole of its prior taxable year (if any), at least 10
percent of the outstanding shares of the voting stock of the paying corporation was owned by
the recipient corporation. cdrep

"xxx xxx xxx"

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 43
 Applying the foregoing provision, the preferential tax rate to be withheld by SVI on its dividend
remittance to PWV shall be twenty five percent (25%), since no representation nor proof whatsoever was
presented to this Office as will warrant the grant of the preferential tax rate of twenty percent (20%) under
paragraph (2)(b) above.

II. FOR OWW and ITV :

Article 10 of the RP-Singapore Tax Treaty provides, viz:

"Article 10

"DIVIDENDS

"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 State. cdrep

"2. However, such dividends may taxed in the Contracting State of which the company
paying the dividends is a resident, and according to the law of that State, but if the recipient is the
beneficial owner of the dividends the tax so charged shall not exceed:

a) 15 per cent of the gross amount of the dividends if the recipient is a company
(including partnership) and during the part of the paying company's taxable year which
precedes the date of payment of the dividend and during the whole of its prior taxable year (if
any), at least 15 per cent of the outstanding shares of the voting stock of the paying company
was owned by the recipient company; and

b) in all other cases, 25 per cent of the gross amounts of the dividends.

"The competent authorities of the Contracting States shall by mutual agreement settle the
mode of application of this limitation.

"xxx xxx xxx"

Applying the foregoing provision, the preferential tax rate to be withheld by SVI on its dividend
remittances to OWW and ITV shall be twenty five percent (25%) of the gross amounts of the dividend
considering that their percentage of ownership did not qualify with the minimum requirement prescribed
in paragraph 2 (a) above. (BIR Ruling No. 044-82) cdtai

III. FOR NPW and SFC:

Articles 1 and 3 of the RP-UK Tax Treaty provides, viz:

"Article 1

"Personal Scope

"1. This Convention shall apply to persons who are residents of one or both of the
Contracting State.

"xxx xxx xxx"

"Article 3

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 44
 "General Definitions

"1. In this Convention, unless the context otherwise requires:

(a) the term 'United Kingdom' means Great Britain and Northern Ireland, including
any area outside the territorial sea of the United Kingdom which in accordance with
international law has been or may hereafter be designated, under the laws of the United
Kingdom concerning the Continental Shelf, as an area within which the rights of the United
Kingdom with respect to the sea bed and sub-soil and their natural resources may be exercised;

"xxx xxx xxx"

(f) the terms 'a Contracting State' and 'the other Contracting State' mean the
Philippines or the United Kingdom, as the context requires.

"xxx xxx xxx"

It is clear from the said Article 1 that the RP-UK Tax Treaty applies only to residents of the United
Kingdom (UK) and/or the Philippines. The term "United Kingdom", as defined in paragraph 1(a) Article 3
above, does not include other territories of, or states dependent to, the UK. This may be inferred from the
said definition since it only speaks of Great Britain and Northern Ireland, its territorial sea, and its
continental shelf as therein provided. Nothing is mentioned on whether the said Tax Treaty shall apply,
with same force and effect, to other territories or dependent states over which the UK exercises
sovereignty. cdasia

Thus, NPW and SFC cannot avail of the provisions of the RP-UK Tax Treaty.

The dividend income then of NPW and SFC shall be subject to the rate of tax provided for under
Section 28(B)(5)(b) of the Tax Code of 1997.

In view of all the foregoing, SVI should withhold a 25% tax on the dividend income of PWV,
OWW, and ITV. With respect to the dividend income of NPW and SFC, the tax to be withheld should be
based on the rate of tax provided for under Section 28(B)(5)(b) of the Tax Code of 1997.

This ruling is issued based on the foregoing facts as represented. If upon investigation, it will be
disclosed that the said facts are different, then this ruling shall be considered null and void. llcd

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 45
 October 7, 1999

ITAD RULING NO. 030-99

RP-Singapore Article 11
142-95

Perez & Associates Law Office

8TH Floor, NGF Champaca Bldg.,
#156 Amorsolo Street, Legaspi Village,
Makati City

Attention: Atty. Cecilia O. Perez

Partner, Perez & Associates Law Office

Gentlemen :

This refers to your letter dated June 4, 1999, requesting on behalf of your client, NOKIA
PHILIPPINES, INC. (Nokia RP) for a ruling on the preferential tax treaty rate of 15% to be withheld on
interests payments to NOKIA ASIA PTE. LTD. (Nokia Asia) of Singapore, pursuant to RP-Singapore Tax
Treaty.

It is represented that Nokia Asia with principal office at 438B Alexandra Road, #07-00 Alexandra
Technopark, Singapore 119968, is a non-resident foreign corporation duly organized and existing under
and by virtue of the laws of Singapore; that it has no permanent establishment in the Philippines as
evidenced by its Certificate of Non-Registration from Securities and Exchange Commission dated July 21,
1999; that on March 10, 1999, a Loan Agreement was entered into by and between Nokia Asia and Nokia
RP in the amount of US$5,000,000.00; that the interest on the Loan shall be payable in United States
dollars and computed based on existing London Interbank Offer Rate (LIBOR) plus margin of One Per
Cent (1%) upon drawdown. cdlex

In reply, please be informed that Article 11 of the RP-Singapore Tax Treaty provides as follows:

"Article 11

"1. Interest arising in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other State.

"2. However, such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 15 per cent of the gross amount of the interest. The competent authorities of
the Contracting State shall by mutual agreement settle the mode of application of this limitation. llcd

"3. The term “interest” as used in this Article means income from debt-claims of every kind,
whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or debentures, as well as income
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 46
 assimilated to income from money lent by the taxation law of the State in which the income arises,
including interest on deferred payment sales. Penalty charges for late payment shall not be regarded
as interest for purposes of this Article.

"xxx xxx xxx"

Such being the case, the interest income to be remitted by Nokia RP to Nokia Asia relative to the
aforementioned loan shall be subject to the preferential tax rate of 15% (as per BIR Ruling No. 142-95,
dated September 13, 1995.)

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. cdtai

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

1999

ITAD RULING NO. 029-99

RP-Japan Article 13 007-96

SyCip Gorres Velayo & Co.

6760 Ayala Avenue,
Makati City

Attention: Atty. E.C. Alcantara

Tax Division

Gentlemen :

This refers to your letter dated August 30, 1999 requesting confirmation of your opinion that the
sale of shares of stock in Toyota Motor Philippines Corporation (TMPC) owned and held by Mitsui & Co.,
Ltd. (Mitsui) to Maximus Management Holding Corporation (MMHC) is not subject to capital gains tax
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 47
 pursuant to Article 13 of the RP-Japan Tax Treaty.

It is represented that Mitsui is a corporation organized and existing under and by virtue of the laws
of Japan; that it is the legal and registered owner of 1,975,500 shares of the capital stock of TMPC, a
domestic corporation with principal place of business at Bicutan, Km. 15, South Superhighway,
Parañaque, Metro Manila; that Mitsui intends to sell its 1,185,300 shares in TMPC to MMHC, a
corporation duly incorporated and registered with the Philippine Securities and Exchange Commission
(SEC); that as of December 31, 1998, the assets of TMPC do not consist principally of immovable
property located in the Philippines. cdasia

In reply, please be informed that pursuant to Article 13 of the RP-Japan Tax Treaty, stating:

"ARTICLE 13

"(1) Gains derived by a resident of a Contracting State from the alienation of immovable
property as defined in paragraph (2) of Article 6 and situated in the other Contracting State may be
taxed in that other Contracting State.

"(2) Gains from the alienation of any property, other than immovable property, forming part
of the business property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or of any property, other than immovable property, pertaining to a
fixed base available to a resident of a Contracting State in the other Contracting State for the purpose
of performing independent personal services, including such gains from the alienation of such a
permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may
be taxed in that other Contracting State. llcd

"(3) Gains derived by a resident of a Contracting State from the alienation of ships or
aircraft operated in International traffic, and any property, other than immovable property, pertaining
to the operation of such ships or aircraft shall be taxable only in that Contracting State.

"(4) Gains from the alienation of shares of a company, a partnership or a trust the property
of which consists principally of immovable property situated in a Contracting State may be taxed in
that Contracting State. (emphasis ours)

"(5) Gains from the alienation of any property other than referred to in paragraphs (1), (2),
(3) and (4) shall be taxable only in the Contracting State of which the alienator is a resident."

the gains which will be realized by Mitsui from the sale of its shares of stock in TMPC, a domestic
corporation, to MMHC shall be taxable only in Japan. However, under paragraph 4 of the aforequoted
provision supra, the Philippines may tax the gains derived from the disposition of interest in a corporation
if its assets consist principally of real property interest located in the Philippines. “Real Property Interest”
means interest on properties enumerated in Section 3 of Revenue Regulations No. 4-86 which are not,
however, exclusive of other that are similarly situated. As used in the treaties and in the Regulations, it
shall be understood to include real properties as understood under Philippine Laws. Moreover,
“Principally” means more than 50% of the entire assets in terms of value. (Sec. 2(a) and (b), Revenue
Regulations No. 4-86)

On the basis of the foregoing, it is the opinion of this Office as it hereby holds that the sale by
Mitsui to MMHC of the shares of stocks issued by TMPC to the former is not subject to capital gains tax.
The value of the real property interests of TMPC that are located in the Philippines does not exceed fifty
percent of its total assets of P6,152,604,000 considering that of the total amount of P3,833,504,000 (net of
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 48
 depreciation) of "Property, Plant and Equipment," P2,638,590,000 is immovable property. Accordingly,
the percentage of immovable property over total assets of TMPC is only 43%.

Such being the case, any capital gains which Mitsui might derive from the disposition of its shares
in TMPC is not subject to capital gains tax.

This ruling is being issued on the basis of the foregoing facts as represented and will be considered
null and void if upon investigation it will be disclosed that the facts are different. prcd

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

October 7, 1999

ITAD RULING NO. 028-99

RP-Netherlands, Art. 10 DA-055-2-2-96 UN-009-1-4-95

Castillo Laman Tan Pantaleon

& San Jose Law Offices
The Valero Tower, 122 Valero Street
Salcedo Village, 1227 Makati City

Attention: Atty. Dina D. Lucenario

and
Atty. Virginia B. Viray

Gentlemen :

This refers to your letter dated December 28, 1998 on behalf of your clients, Carrier Air

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 49
 Conditioning Philippines Inc. (CACPI) and Carrier HVACR Investments B.V. (HVACR) requesting
confirmation of your opinion that the dividends to be remitted by CACPI to HVACR is subject to final
withholding tax at the preferential rate of 10% pursuant to Article 10 (2)(a) of the RP-Netherlands Tax
Treaty. cdll

It is represented that HVACR is s foreign corporation organized and existing under the laws of
Netherlands with principal office at Herengracht 548 1017GC Amsterdam, The Netherlands, while CACPI
is a domestic corporation duly organized and existing under Philippine laws, with business address at KM
20 East Service Road South Superhighway, Alabang, Muntinlupa, Metro Manila; that on December 21,
1998, the Board of Directors of CACPI declared cash dividends out of its interim retained earnings in the
amount of PHP36,000,000.00 to its stockholders of record as of said date; that as of even date, HVACR
owns 69,995 shares out of total 70,000 shares of CACPI.

In reply, please be informed that Article 10 of the RP-Netherlands Tax Treaty declares:

“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;

b) 15 per cent of the gross amount of the dividends in all other cases." LibLex

Accordingly, your opinion that the PHP36,000,000 cash dividends (appearing in the Audited
Financial Statement of CACPI for 1998 and 1997 and certified by the Corporate Secretary dated
December 28, 1998) declared by CACPI in favor of HVACR is subject to 10% preferential rate pursuant
to the RP-Netherlands Tax Treaty is hereby confirmed considering that recipient HVACR is the beneficial
owner of the dividends which holds directly 99% of the capital of CACPI. (BIR Rulings No.
DA-055-2-2-96 and UN-009-1-4-95).

This ruling is being issued based on facts as represented. However, if upon investigation, it will be
discovered or disclosed that the facts are different, then this ruling shall be considered as null and void. LibLex

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 50
 Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

October 7, 1999

ITAD RULING NO. 027-99

RP-Korea-Art. 13
NIRC-SEC. 176
007-96

Romulo, Mabanta, Buenaventura

Sayoc & De Los Angeles
30th Floor, Citibank Tower,
Citibank Plaza,
8741 Paseo de Roxas
Makati City

Attention: Atty. Perry L. Pe and

Atty. Jayson L. Fernandez

Gentlemen :

This refers to your letter dated July 08, 1999, requesting confirmation of your opinion that the sale
of your client, KOREA MERCHANT BANKING CORPORATION (KMBC) of its shares of stock in ALL
ASIA CAPITAL AND TRUST CORPORATION (ALL ASIA) to LOMBARD ASIAN PRIVATE
INVESTMENT COMPANY LDC (LOMBARD), is exempt from capital gains tax, pursuant to Article 13
of the RP-Korea Tax Treaty. cdrep

It is represented that KMBC is a non-resident foreign corporation duly organized and existing under
the laws of Korea; that it is not registered either as a corporation/partnership in the Philippines as per
certification dated July 09, 1999 issued by the Securities and Exchange Commission (SEC); that it owns
Six Million Nine Hundred Ninety Four Thousand Two Hundred Ninety Six (6,994,296) shares of stock
with a par value of P10.00 per share or a total par value of Sixty Nine Million Nine Hundred Forty Two
Thousand Nine Hundred Sixty Pesos (P69,942,960.00) in ALL ASIA, a corporation duly organized and
existing under the laws of the Philippines; that on July 01,1999, a Share Purchase Agreement was entered
into by and between KMBC and LOMBARD, a non-resident foreign corporation duly organized and
existing under the laws of the Cayman Islands, whereby KMBC sold its 6,994,296 common shares in ALL

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 51
 ASIA to LOMBARD; that the assets of ALL ASIA do not consist principally of real property interest
located in the Philippines, as shown in its latest Audited Financial Statements (as of and for the years
ended December 31, 1998 and 1997).

In reply, please be informed that Article 13 of the RP-Korea Tax Treaty provides as follows:

"Article 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable

property referred to in Article 6 (Income from Immovable Property), and situated in the other
Contracting State may be taxed in that other State. cdll

2. Gains from the alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the other Contracting State
or of movable property pertaining to a fixed base available to a resident of Contracting State for the
purpose of performing independent personal services, including such gains from the alienation of such
permanent establishment (alone or with the whole enterprise) or of such fixed base may be taxed in
that other State.

3. Gains from alienation of ships or aircraft operated in international traffic by enterprises

of a Contracting State or gains from alienation of movable property pertaining to the operation of such
ships or aircraft, shall be taxable only in that State of which the enterprise is a resident.

4. Gains from the alienation of shares of a company, the property of which consists
principally of immovable property situated in a Contracting State, may be taxed in that State. Gains
from the alienation of interest in a partnership or a trust, the property of which consists principally of
immovable property situated in a Contracting State, may be taxed in that State. cda

5. Gains from the alienation of any property, other than those mentioned in paragraphs 1, 2,
3, and 4 shall be taxable only in the Contracting State of which the alienator is a resident."

the gains which will be realized by KMBC from the sale of stock in ALL ASIA to LOMBARD shall be
taxable only in Korea. However, under the aforequoted provision of paragraph 4 supra, the Philippines
may tax the gains derived from the disposition of interest in a corporation if its interest in a corporation
consist principally of real property interest located in the Philippines. “Real Property Interest” means
interest on properties enumerated in Section 3 of Revenue

Regulations No. 4-86 which are not, however, exclusive of others that are similarly situated. As
used in the treaties and in the Regulations, it shall be understood to include real properties as understood
under Philippine Laws. Moreover, "Principally" means more than 50% of the entire assets in terms of
value. (Sec. 2(a) and (b), Revenue Regulations No. 4-86).

Verification of the 1997 and 1998 Audited Financial Statements of ALL ASIA disclosed that its
real property interest is less than 50% of its entire assets.

Accordingly, your opinion that the sale of KOREA MERCHANT BANKING CORPORATION of
its share of stock in ALL ASIA CAPITAL & TRUST CORPORATION to LOMBARD ASIAN PRIVATE
INVESTMENT COMPANY LDC is not subject to Philippine income tax is hereby confirmed. However,
the Share Purchase Agreement shall be subject to the documentary stamp tax imposed under Section 176

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 52
 of the Tax Code of 1997. (BIR Ruling No. 007-96 dated January 18, 1996)

This ruling is being issued on the basis of the foregoing facts as represented. However, if upon
investigation it will be disclosed that the actual facts are different, then this ruling shall be considered null
and void. cdrep

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

October 1, 1999

ITAD RULING NO. 026-99

RP-US, Arts. 5 & 8

Punongbayan & Araullo

6th Floor, Vernida IV Building
Alfaro St., Salcedo Village
1200, Makati City

Attention: Atty. Vic C. Mamalateo

Tax Partner

Gentlemen :

This refers to your letter dated August 4, 1999 requesting confirmation of your opinion on the tax
implications of the proposed sales re-structuring operations of your client, Intel Corporation (IC).

It is represented that IC is a non-resident foreign corporation duly organized and existing under the
laws of the United States of America; that Intel Philippines Manufacturing, Inc. (IPMI) and Intel

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 53
 Technology Phils., Inc. (ITPI) are domestic corporations duly organized and existing under Philippine
Laws and are registered with the Securities and Exchange Commission (SEC); that IPMI and ITPI are
registered with the Board of Investment (BOI) and Philippine Economic Zone Authority (PEZA),
respectively; that IC is proposing to set-up a sales subsidiary, the Intel Americas, Inc. (IA), a nonresident
foreign corporation that will be organized under the laws of the United States of America; that the
proposed business set-up between and among the above-mentioned corporations will be as follows:

1. IC will consign goods to ITPI and IPMI for assembly and test processing and the
contract between them is limited to the said activities; LexLib

2. IA will buy the assembled and tested products from IC and title over the goods will be
transferred to IA in the Philippines;

3. IA will pick-up its own finished goods from IPMI and ITPI and the contract between
them is limited to picking, packing and shipping for IA;

4. IPMI and ITPI are entitled to collect from IC service fees for assembly and test
processing and from IA service fees for picking, packing and shipping at cost plus 10%
mark-up;

5. The sales territory of IA will be the western hemisphere.

On the basis of the foregoing facts of the proposed business structure, you now request for a ruling
confirming the following:

1. Intel Corporation is not subject to Philippine income tax on the sale of goods to Intel
Americas, Inc.; cdrep

2. Intel Americas, Inc. is not subject to Philippine income tax on the sale of goods to its
foreign customers; and

3. The net income derived by IPMI and ITPI on the picking, packing and shipping service
fees will be subject to the normal corporate income tax at 33% for 1999 and at 32%
beginning 2000.

In reply, please be informed that Article 8 (1) and Article 5 (1) and (2) of the RP-US Tax Treaty
provide, viz:

“Article 8

BUSINESS PROFITS

"(1) Business profits of a resident of one of the Contracting States shall be taxable only in
that State unless the resident has a permanent establishment in the other Contracting State. If the
resident has a permanent establishment in that other Contracting State, tax may be imposed by that
other Contracting State on the business profits of the resident but only so much of them as are
attributable to the permanent establishment. cdtai

"xxx xxx xxx"

"Article 5

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 54
 PERMANENT ESTABLISHMENT

"(1) For the purposes of this Convention, the term "permanent establishment" means a fixed
place of business through which a resident of one of the Contracting States engages in a trade or
business.

"(2) The term "fixed place of business" includes but is not limited to:

(a) A seat of management;

(b) A branch;

(c) An office;

(d) A store or other sales outlet;

(e) A factory;

(f) A workshop;

(g) A warehouse;

(h) A mine, quarry, or other place of extraction of natural resources;

(i) A building site or construction or assembly project or supervisory activities in

connection therewith, provided such site, project or activity continues for a period of more
than 183 days; and cdrep

(j) The furnishing of services, including consultancy services, by a resident of one of

the Contracting States through employees or other personnel, provided activities of that nature
continue (for the same or a connected project) within the other Contracting State for a period
or period aggregating more than 183 days.

Based on the above-quoted provisions, IC and IA will be taxable in the Philippines only if they
have a permanent establishment situated in the Philippines.

The contract of IC with ITPI and IPMI is limited to assembly and testing. These activities
performed by ITPI and IPMI for IC will not produce any taxable profit or gain for the latter. On the other
hand, the contract of IA with ITPI and IPMI is limited to picking, packing and shipping of the assembled
and tested goods. Since transfer of title over the goods from IC to IA will take place in the Philippines, IA
as owner of the assembled and tested goods hires the services of ITPI and IPMI for picking, packing and
shipping of the same.

Considering that both IC and IA do not have permanent establishments in the Philippines to which
its business profits or income is attributable and considering further that the sales agreement between IC
and IA on one hand, and the sales agreement between IA and foreign customers on the other hand, will
take place outside the Philippines, both IC and IA are not subject to Philippine income tax and
consequently to the withholding tax prescribed under the National Internal Revenue Code of 1997. LibLex

However, the net income derived by ITPI and IPMI from IC for assembly and testing services and
from IA for the picking, packing and shipping services will be subject to the normal corporate income tax
of 33% for 1999 and 32% beginning 2000, and the sale of services is VAT zero-rated, in accordance with
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 55
 Section 27 of the National Internal Revenue Code of 1997.

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, and/or any of the requirements imposed in
this letter are not complied with, then this ruling shall be considered null and void. cda

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

September 15, 1999

ITAD RULING NO. 025-99

NIRC-Sec. 108
RP-UK-Art. 11
000-00

Bush Boake Allen Philippines, Inc.

10-B Reliance cor. Brixton Streets,
1600 Pasig City

Attention: Ms. Nelia G. Corpuz

Finance Manager

Gentlemen :

This refers to your application for relief from double taxation dated October 7, 1998, in behalf of
Bush Boake Allen, Inc. (BBA), requesting for a preferential tax rate of fifteen percent (15%) to be
withheld on royalty remittances by Bush Boake Allen Philippines, Inc. (BBAP) pursuant to the RP-UK
Tax Treaty.

Documents submitted to this Office show that BBA is a non-resident foreign corporation duly
organized and existing under the laws of England, with no permanent establishment here; that BBA
entered into a Support Services Agreement with BBAP, a domestic corporation duly organized and
existing under Philippine laws, engaged in the manufacture of compound flavourings, fragrances,
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 56
 essences, seasonings, spice products and other product lines; that on February 4, 1999, a Support Services
Agreement was entered into by and between BBAP and BBA whereby the latter shall provide the former
support services such as market research and information and methodology in flavor, fragrances and
aroma chemical; that such agreement was duly registered with the Intellectual Property Office; and that in
consideration thereof, BBAP shall pay BBA a monthly fee for the support services provided by the latter
to the former. cda

In reply, please be informed that Article 11 of the RP-UK Tax Treaty provides, as follows:

"Article 11

Royalties

(1) Royalties arising in a Contracting State which are derived and beneficially owned by a
resident of the other Contracting State may be taxed in that other State.

(2) Such royalties may also be taxed in the Contracting State in which they arise, and
according to the law of that State. However, the tax so charged shall not exceed:

(a) 15% of the gross amount of the royalties, where the royalties are paid:

(i) by an enterprise registered with the Philippine Board of Investments and

engaged in preferred areas of activity, or prcd

(ii) ...

(b) in all other cases, 25 per cent of the gross amount of the royalties.

(3) The term "royalties" as used in this Article means payment of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
(including cinematograph films, and films or tapes for radio or television broadcasting), any patent,
trademark, design or model, plan, secret formula or process, or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for information concerning industrial, commercial
or scientific experience."

It is observed, however, that BBAP is not a Board of Investment (BOI) registered enterprise
engaged in preferred areas of activity. The BOI certification submitted certifies only that BBAP is
authorized to accept the additional permissible investment of its foreign investor, A. Boake Roberts & Co.
(Holdings) Ltd.

Such being the case, your application for a preferential tax rate of fifteen percent (15%) to be
applied on your royalty remittances to BBA is hereby denied for lack of legal basis. However, pursuant to
paragraph 2 (b), Article 11 of the aforesaid tax treaty, the royalty under consideration is subject to a final
tax rate of twenty five percent (25%) which shall be withheld before actual remittance of said royalty. cdll

Accordingly, your company being a withholding agent, is required to pay the under-remitted
amount of P745,378.15 representing the difference between the amount of tax withheld and the approved
rate of twenty five percent (25%). Such amount is subject to surcharge, interest and compromise penalty
adjustment up to the date of full payment.

Moreover, under Section 108 of the National Internal Revenue Code of 1997, the royalty payments
to be remitted by BBAP is subject to the ten percent (10%) Value-added tax (VAT). Sec. 4.102-1(b) of
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 57
 Revenue Regulations No. 7-95, as amended by Revenue Regulations No. 6-97, provides that:

"The VAT on rental and/or royalties payable to non-resident foreign corporations or owners
for the sale of services and use or lease of properties in the Philippines shall be based on the contract
price agreed upon by the licensor and the licensee. The licensee shall be responsible for the payment
of VAT on such rentals and/or royalties in behalf of the non-resident foreign corporation or owner by
filing a separate VAT declaration/return for this purpose. The duly validated VAT declaration/return
is sufficient evidence in claiming input tax credit by the licensee."

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. cdtai

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

September 10, 1999

ITAD RULING NO. 024-99

RP-Japan Article 13 007-96

Poblador Bautista & Reyes

Law Offices
5th Floor SEDCCO 1 Building
120 Rada corner Legaspi Streets
Legaspi Village, Makati City

Attention: Atty. Mario Luza Bautista

and
Atty. Susan Bustos-Jacinto

Gentlemen :

This refers to your letter dated April 5, 1999 requesting confirmation of your opinion to the effect
that the transfer by YKK Corporation (YKK Japan) to YKK Holding Asia Pte. Ltd. (YKK Singapore) of
its shares in YKK Zipper Phils. (YKK Philippines) is not subject to capital gains tax pursuant to the
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 58
 RP-Japan Tax Treaty. LibLex

It is represented that YKK Japan is a non-resident foreign corporation duly organized and existing
under the laws of Japan; that it is not registered either as a corporation/partnership in the Philippines as per
certification dated March 22, 1999 issued by the Securities and Exchange Commission; that YKK
Philippines is a corporation duly organized and existing under the laws of the Philippines; that YKK
Singapore is a non-resident foreign corporation organized and existing under the laws of Singapore; that
YKK Japan is the stockholder of record of fifty per cent (50%) of the outstanding capital stock of YKK
Philippines equivalent to Thirty Two Million (32,000,000) shares of stock, with a par value of One Peso
(1.00) per share, or an aggregate par value of Thirty Two Million Pesos (P32,000,000.00); that on October
30, 1998, by virtue of the Share Transfer Agreement by and among YKK Japan, YKK Singapore and
Messrs. Tadahiro Yoshida, Kazuhiko Kokubun and Hiroshi Sekiji (the three individuals being the
nominees of YKK Japan in YKK Philippines), YKK Japan transferred and assigned to YKK Singapore its
shares in YKK Philippines as payment for its subscription to One Million Three Hundred Thousand
(1,300,000) shares of stock of YKK Singapore for the total subscription of One Million Three Hundred
Thousand Dollars, Singapore currency (S$ 1,300,000.00).

In reply, please be informed that Article 13 of the RP-Japan Tax Treaty, provides as follows:

"Article 13

"(1) Gains derived by a resident of a Contracting State from the alienation of immovable
property as defined in paragraph (2) of Article 6 and situated in the other Contracting State may be
taxed in that other Contracting State. prcd

"(2) Gains from the alienation of any property, other than immovable property, forming part
of the business property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or of any other property, other than immovable property, pertaining to a
fixed base available to a resident of a Contracting State in the other Contracting State for the purpose
of performing independent personal services, including such gains from the alienation of such a
permanent establishment (alone or together with the whole enterprise) or such a fixed base, may be
taxed in that other Contracting State.

"(3) Gains derived by a resident of a Contracting State from the alienation of ships and
aircraft operated in international traffic and any property, other than immovable property, pertaining
to the operation of such ships or aircraft shall be taxable only in that Contracting State.

"(4) Gains from the alienation of shares of a company, a partnership or a trust the property
of which consists principally of immovable property situated in a Contracting State, may be taxed in
that Contracting State. prcd

"(5) Gains from the alienation of any property other than those referred to in paragraphs (1),
(2), (3) and (4) shall be taxable only in the Contracting State of which the alienator is a resident."

the gains which will be realized by YKK Japan from the transfer of its shares of stock in YKK Philippines
to YKK (Singapore) shall be taxable only in Japan. However, under the aforequoted provision of
paragraph 4 supra, the Philippines may tax the gains derived from the disposition of interest in a
corporation if its entire assets consist principally of real property interest located in the Philippines. “Real
Property Interest” means interest on properties enumerated in Section 3 of Revenue Regulations No. 4-86
which are not, however, exclusive of others that are similarly situated. As used in the treaties and in the
Regulations, it shall be understood to include real properties as understood under Philippine Laws.
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 59
 Moreover, “Principally” means more than 50% of the entire assets in terms of value. (Sec. 2(a) and (b),
Revenue Regulations No. 4-86).

Verification of the 1997 and 1998 Audited Financial Statements of YKK Philippines disclosed that
its real property interest is less than 50% of its entire assets. llcd

Accordingly, your opinion that the transfer by YKK Japan of its shares in YKK Philippines to YKK
Singapore is not subject to Philippine income tax is hereby confirmed. However, the Share Transfer
Agreement shall be subject to the documentary stamp tax imposed under Section 176 of the Tax Code of
1997. (BIR Ruling No. 007-96 Dated January 18, 1996)

This ruling is being issued on the basis of the 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.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

SUMMARY OF REAL PROPERTY INTEREST

1998 1997
Machinery and equipment P282,215,683 P252,953,513
Buildings 57,141,886 41,540,154
[Transportation equipment] 12,439,927 11,014,791
[Office furniture and fixtures] 21,272,417 14,446,086
Leasehold improvements 3,203,088 3,203,088
Factory tools and equipment 5,625,105 4,711,837
Communication equipment 1,714,825 1,189,668
————— —————
383,612,931 329,059,137
Less-accumulated depreciation 256,483,298 224,262,121
————— —————
127,129,633 104,797,016
Construction in progress 67,743,744 67,597,566
————— —————
P194,873,377 P172,394,582
========== ==========
Total Assets P555,009,779 P518,865,197
========== ==========

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 60
 RATIO OF RPE TO TA 35 % 33 %

NOTE: Transportation equipment and Office furniture and fixtures are not real properties as defined under Revenue
Regulations No. 4-86. Both are included in the summary because they are consolidated in the accumulated depreciation and
there is no way of determining the specific depreciation cost because of the inviolability of an itemized depreciation schedule.

August 30, 1999

ITAD RULING NO. 023-99

Section 106 (A) Section 108

DA 330-99

The Canadian Embassy

9th and 11th Floors, Allied Bank Centre
6754

Gentlemen :

This refers to your Note No. 132/99 dated June 18, 1999, requesting for exemption from
value-added tax (VAT) on the purchase of one (1) unit mist silver HONDA CR-V, 1999 Model with
Engine No. PEWD2-P101019 and Chassis No. PADRD1720WV001020 for the official use of the
Socio-Economic Development Through Cooperatives in the Philippines (SEDCOP) of the Canadian
International Development Agency (CIDA), Embassy of Canada.

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services cdphil

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption
from value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by
that Embassy of goods and/or services shall be subject to the value-added tax prescribed under Sections
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 61
 106 (A) and 108 both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemptions to the Canadian
Embassy or its personnel on their local purchases of goods and/or services it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchases of goods and services in your country.

Such being the case, the local purchase of one (1) unit 1999 HONDA CR-V, for the official use of
the Socio-Economic Development Through Cooperatives in the Philippines, Canadian Embassy is exempt
from the value-added tax. cdlex

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

August 26, 1999

ITAD RULING NO. 022-99

Section 106
Section 108
206-93

Embassy of the Democratic Socialist

Republic of Sri Lanka
Makati City, Philippines

Gentlemen :

This refers to your faxed letter dated April 23, 1999, requesting for exemption from value added tax
(VAT) on the purchase of goods and services such as VAT charges on the telephone, electricity, water and

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 62
 gasoline bills.

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value-added tax (VAT) on its local purchase of goods and services. In other words, purchase by the
Embassy of the Democratic Socialist Republic of Sri Lanka of goods and/or services shall be subject to the
value-added tax prescribed under Section 106 and 108, both of the National Internal Revenue Code of
1997. Cdpr

However, under the principle of reciprocity, this Office may grant tax exemption to the embassy of
a foreign state or its personnel on their local purchase of goods and/or services it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country (BIR Ruling 206-93
dated May 11, 1993).

Hence, the Embassy of the Democratic Socialist Republic of Sri Lanka is entitled to VAT
exemptions on their local purchases of goods and/or services.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 63
 August 24, 1999

ITAD RULING NO. 021-99

RP-Japan Article 11
000-00

Overseas Economic Cooperation Fund

3rd Division Operations Department I
4-1 Ohtemachi I-Chome, Chiyoda Ku
Tokyo, Japan

Attention: Mr. Hiroshi Suzuki

Director

Gentlemen :

This refers to your letter dated July 07, 1999, informing this Office of the merger of the
Export-Import Bank of Japan (JEXIM) and the Overseas Economic Cooperation Fund (OECF) into a new
institution, the Japan Bank for International Cooperation (JBIC) on October 01, 1999, by virtue of the
Japan Bank for International Cooperation Law. Relative thereto, you seek our opinion as to whether or not
the tax exemption with respect to interest income currently being enjoyed by JEXIM and OECF, financial
institutions fully owned by the Japanese Government, pursuant to the RP-Japan Tax Treaty, will likewise
be enjoyed by JBIC. cdasia

In reply, please be informed that Article 11(4) of the RP-Japan Tax Treaty provides as follows:

"Article 11

"xxx xxx xxx

"(4) Notwithstanding the provisions of paragraphs (2) and (3), interest arising in a
Contracting State and derived by the Government of the other Contracting State including
political subdivisions and local authorities thereof, the Central Bank of that other Contracting
State or any financial institution wholly owned by that Government, or by any resident of the
other Contracting State with respect to debt-claims guaranteed or indirectly financed by the
Government of that other Contracting State including political subdivisions and local authorities
thereof, the Central Bank of that other Contracting State or any financial institution wholly
owned by that Government shall be exempt from tax in the first-mentioned Contracting State.

For the purposes of this paragraph, the term "financial institution wholly owned by the
Government" means:

(a) In the case of Japan, the Export-Import Bank of Japan, the Overseas Economic
Cooperation Fund and the Japan International Cooperation Agency;

(b) In the case of the Philippines, the Development Bank of the Philippines; and cda

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 64
 (c) Any such financial institution the capital of which is wholly owned by the
Government of either Contracting State, other than those referred to in sub-paragraphs (a) and (b)
above, as may be agreed from time to time between the Governments of the two Contracting
States.

In view of this, this Office hereby holds that the interest income that will be derived by the Japan
Bank for International Cooperation, being a financial institution wholly owned by the Japanese
Government, is exempt from the Philippine income tax. cdphil

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

August 18, 1999

ITAD RULING NO. 020-99

RP-Japan Art. 12 000

KDK International (Phils.) Corporation

11-A Harmony St. cor. Eleven Road,
Grace Village, Balintawak, Quezon City

Attention: Ng Siong Chi

Vice-President

Gentlemen :

This refers to your application for relief from double taxation dated 09 November 1998 on behalf of
MATSUSHITA SEIKO CO. LTD. (MATSUSHITA), requesting for a preferential tax rate of ten percent
(10%) to be withheld on dividend remittances by KDK INTERNATIONAL (PHILS.) CORPORATION
(KDK), pursuant to the RP-Japan Tax Treaty. LexLib

It is represented that MATSUSHITA is a non-resident foreign corporation duly organized and

existing under the laws of Japan; that it is not registered either as a corporation/partnership in the
Philippines as per certification dated 04 March 1999 issued by the Securities and Exchange Commission;
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 65
 that KDK is a corporation duly organized and existing under the laws of the Philippines; that
MATSUSHITA holds forty percent (40%) of the capital stock of KDK; that on 05 October 1998, the
Board of Directors of the latter passed and approved the declaration of cash dividend in the amount of
P600,000.00, payable to the stockholders of record as of 31 October 1998.

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 per cent 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; LibLex

xxx xxx xxx"

"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 MATSUSHITA SEIKO CO., LTD. holds forty per cent (40%)
of the capital stock of KDK INTERNATIONAL (PHILS.) CORPORATION, your application is hereby
approved. Hence, the preferential tax rate to be withheld by the latter on its dividend remittances to the
former is ten per cent (10%).

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. cdlex

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 66
 August 18, 1999

ITAD RULING NO. 019-99

RP-Japan Article 12 000-00

Juntec Corporation
Blk. 5, Lot 7, PEZA-LIIP,
Bo. Mamplasan, Biñan, Laguna

Attention: Takeko Hamahata

Vice-President

Gentlemen :

This refers to your application for relief from double taxation dated March 22, 1999 on behalf of
HONKO SEIKOSHO CO., LTD., (HONKO) requesting for a preferential tax rate of ten percent (10%) to
be withheld on royalty remittances by JUNTEC CORPORATION (JTC), pursuant to the RP-Japan Tax
Treaty. llcd

It is represented that HONKO is a non-resident foreign corporation duly organized and existing
under the laws of Japan, with no permanent establishment in the Philippines; that it entered into a
Technical Assistance Agreement for a period of ten (10) years from January 1, 1998 up to December 31,
2007 with JTC, a PEZA-registered domestic corporation, duly organized and existing under the laws of the
Philippines, engaged in the manufacture and assembly of metal parts and components for floppy disk
drives and car audio systems; that HONKO will provide JTC technical information for the manufacture
and assembly of metal parts and components for floppy disk drives, audio equipment and related
information system equipment; that said agreement was duly registered with the Intellectual Property
Office; that in consideration for the technical information, the JTC shall pay to HONKO, a royalty
equivalent to five percent (5%) of the net sales amount of products. cdtai

In reply, please be informed that Article 12 of the RP-Japan Tax Treaty provides as follows:

"Article 12

"1. Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other Contracting State.

"2. However, such royalties may also be taxed in the Contracting State in which they arise,
and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
royalties the tax so charged shall not exceed:

a. 15 per cent of the gross amount of the royalties if the royalties are paid in respect
of the use of or the right to use cinematograph films and films or tapes for radio or television
broadcasting;

b. 25 per cent of the gross amount of the royalties in all other cases.
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 67
 "3. Notwithstanding the provisions of paragraph (2), the amount of tax imposed by the
Philippines on the royalties paid by a company, being a resident of the Philippines, registered with the
Board of Investments and engaged in preferred pioneer areas of investment under the investment
incentives laws of the Philippines to a resident of Japan, who is the beneficial owner of the royalties,
shall not exceed 10 per cent of the gross amount of the royalties. Cdpr

"4. The term "royalties" as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films and films or tapes for radio or television broadcasting, any patent,
trademark, design or model, plan, secret formula or process, or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for information concerning industrial, commercial
or scientific experience.”

xxx xxx xxx"

Such being the case, and since JTC is not registered with the Board of Investments and is not
engaged in preferred pioneer areas of investment under Executive Order No. 226 otherwise known as the
Omnibus Investments Code, the royalties to be remitted by JTC to Honko relative to the aforementioned
Technical Assistance Agreement shall be subject to a tax rate of 25% of the gross amount of the royalties
pursuant to Article 12(2)(b) of the RP-Japan Tax Treaty.

Accordingly, JUNTEC CORPORATION, as withholding agent is required to pay the

under-remitted amount of P895,382.54 plus surcharge, interest and penalties through the bank within the
jurisdiction of the Revenue District Office (RDO) where the former is registered. cdlex

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.

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

August 16, 1999

ITAD RULING NO. 018-99

Art. 14, RP-Japan

Art. 14, RP-Korea

NNA Philippines Co. Inc.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 68
 Unit 1814, Cityland Herrera Tower
98 Herrera cor. Valero Sts.
Makati City

Attention.: Ms. Miriam E. Lecciones

Executive Secretary

Gentlemen :

This refers to your letter dated April 26,1999, requesting for a ruling on the correct tax rate
applicable to a Japanese national and a Japan-born Korean who:

1. has temporarily entered the Philippines without a visa under Executive Order No. 408
and rendered professional or skilled services to a domestic multinational company for a
fee;

2. has secured an Alien Employment Permit from the Department of Labor and
Employment and has been present in the Philippines for an aggregate period of less
than 180 days; likewise, the correct tax rate, if they are present in the Philippines for an
aggregate period exceeding 180 days; and LexLib

3. has secured both an Alien Employment Permit from the Department of Labor and
Employment and 9 g Visa from the Bureau of Immigration and Deportation.

In reply, please be informed as follows:

1. Article 14 (1) of the RP-Japan Tax Treaty provides, viz:

"Article 14

"1. Income derived by a resident of a Contracting State in respect of professional services or

other activities of an independent character shall be taxable only in that Contracting State unless he
has a fixed base regularly available to him in the other Contracting State for the purpose of
performing his activities or he is present in that other Contracting State for a period or periods
exceeding in the aggregate 120 days in the calendar year concerned. If he has such a fixed base or
remains in that other Contracting State for the aforesaid period or periods, the income may be taxed in
that other Contracting State but only so much of it as is attributable to that fixed base or is derived in
that other Contracting State during the aforesaid period or periods". prcd

Moreover, Article 14(1) of the RP-Korea Tax Treaty provides, viz:

"Article 14

Independent Personal Services

"1. Income derived by a resident of a Contracting State in respect of professional services or

other activities of an independent character shall be taxable in that State. However, such income may
be taxed in the other Contracting State:

a) if he has a fixed base regularly available to him in that other State for the purpose of
performing his activities but only so much of the income as is attributable to that fixed base; or

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 69
 b) if his stay in that other State is for a period or periods aggregating 120 days or more in
the calendar year".

Such being the case, and since the Japanese national and the Korean national have no fixed base
regularly available to them in the Philippines, for the purpose of performing their professional activities,
their remuneration or fee received from a domestic multinational company shall be taxable only in Japan
and Korea as the case may be. Moreover, if the Japanese and Korean nationals are present in the
Philippines for a period or periods aggregating less than 121 days and 120 days, respectively, their
remuneration or fee shall likewise be taxable only in Japan and Korea as the case may be. However, if the
said nationals are present in the Philippines for a period or periods aggregating 121 days or more for a
Japanese and 120 days or more for a Korean, their remuneration or fee shall be subject to tax in the
Philippines. They may either be taxed as nonresident alien engaged in trade or business in the Philippines
under Section 25 (A)(1) of the Tax Code of 1997 if their stay in the Philippines is for an aggregate period
or periods of more than 180 days during any calendar year or as a nonresident alien not engaged in trade or
business in the Philippines if their stay is for an aggregate period of 121 days or more for the Japanese and
120 days or more for the Korean but not more than 180 days in a calendar year under Section 25 (B) of the
Tax Code of 1997. cdlex

2. Articles 14(1) and also 14(1) of the RP-Japan and RP-Korea Tax Treaties, clearly provide that
if the stay of a Japanese and a Korean national in the Philippines is for a period aggregating 121 days and
120 days, respectively, in the calendar year, their remuneration or income in respect of professional
services or other activities of an independent character derived in the Philippines shall be taxable in this
country. If their stay in the Philippines is for a period or periods aggregating less than 121 days for
Japanese and less than 120 days for Korean, in a calendar year, their remuneration or fee in respect of
professional services rendered in the Philippines shall be taxable only in Japan or Korea as the case may
be. Accordingly, if the Japanese and Korean nationals are present in the Philippines for an aggregate
period or periods exceeding 180 days in a calendar year, their income derived in the Philippines shall be
subject to tax under Section 25(A)(1) of the Tax Code of 1997. Moreover, if their stay in the Philippines is
for an aggregate period or periods of less than 180 days in a calendar year but exceeding 121 days or 120
days as the case may be, their income derived in the Philippines shall be subject to tax under Section
25(B) of the Tax Code of 1997. However, if their stay is for an aggregate period or periods of less than
180 days which is also less than 121 days (Japanese) or 120 days (Korean) in a calendar year, their income
derived in the Philippines shall be taxable only in Japan and Korea as the case may be.

3. The taxability of the income derived by a Japanese and a Korean national in the Philippines
who have secured an Alien Employment Permit from the Department of Labor and Employment and a
Pre-arranged Employment Visa from the Bureau of Immigration and Deportation will depend on their
aggregate length of stay in the Philippines during a calendar year pursuant to the RP-Japan and RP-Korea
Tax Treaties. prcd

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 70
 August 10, 1999

ITAD RULING NO. 017-99

RP-UK-Art. 12
RP-Netherlands-Art. 13
RP-Germany-Art. 13
000-00

G.K. Goh Securities (Phils.), Inc.

36/F C-C Rufino Plaza Tower,
Ayala Avenue, Makati City

Attention: Mr. Isidro R. Santos

Vice President

Gentlemen :

This refers to your letter dated April 26, 1999, requesting confirmation of your opinion that sale of
shares of stock by your non-resident foreign clients, particularly residents of United Kingdom (UK),
Netherlands and Germany, are exempt from the stock transaction tax, pursuant to the RP tax treaties with
UK, Netherlands and Germany. prcd

In reply, please be informed that Article 12 of the RP-UK Tax Treaty provides as follows:

"Article 12

Gains from the Alienation of Property

1. Capital gains from the alienation of immovable property, as defined in paragraph (2) of
Article 6, may be taxed in the Contracting State in which such property is situated.

2. Capital gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing professional services,
including such gains from the alienation of such a permanent establishment (alone or together with
the whole enterprise) or of such a fixed base, may be taxed in the other State.

3. Notwithstanding the provisions of paragraph (2) of this Article, capital gains derived by a
resident of a Contracting State from the alienation of ships and aircraft operated in international
traffic and movable property pertaining to the operation of such ships and aircraft shall be taxable

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 71
 only in that Contracting State. LexLib

4. Capital gains from the alienation of any property other than those mentioned in
paragraphs (1), (2) and (3) of this Article shall be taxable only in the Contracting State of which the
alienator is a resident."

Article 13 of the RP-Netherlands Tax Treaty provides as follows:

"Article 13

Gains from the Alienation of Property

1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6,

may be taxed in the State in which such property is situated.

2. Gains from the alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of one of the States has in the other State, or of movable
property pertaining to a fixed base available to a resident of one of the States in the other State for the
purpose of performing professional services, including such gains from the alienation of such
permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be
taxed in the other State.

3. Notwithstanding the provisions of paragraph 2, gains derived by an enterprise of one of

the States from the alienation of ships and aircraft operated in international traffic and movable
property pertaining to the operation of such ships or aircraft shall be taxable only in that State. cdrep

4. Gain from the alienation of any property other than those mentioned in paragraphs 1, 2
and 3, shall be taxable only in the State of which the alienator is a resident."

Article 13 of the RP-Germany Tax Treaty provides as follows:

"Article 13

Capital Gains

1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6,

may be taxed in the Contracting State in which such property is situated.

2. Gains from the alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the other Contracting State
or of movable property pertaining to a fixed base available to a resident of a Contracting State in the
other Contracting State for the purpose of performing professional services, including such gains from
the alienation of such a permanent establishment (alone or together with the whole enterprise) or of
such a fixed base, may be taxed in the other State. However, gains from the alienation of ships and
aircraft operating in international traffic and movable property pertaining to the operation of such
ships and aircraft, shall be taxable only in the Contracting State in which the place of effective
management of the enterprise is situated. LexLib

3. Gains from the alienation of shares of a company which is a resident of a Contracting

State may be taxed in that State.

4. Gains from the alienation of any property other than those mentioned in paragraphs 1 to
3 shall be taxable only in that Contracting State of which the alienator is a resident."

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 72
 Under the above-mentioned provisions of the RP-UK, RP-Netherlands, RP-Germany Tax Treaties,
gains from the alienation of shares of stock shall be taxable only in the country of the alienator.

Hence, the sale, barter or exchange of shares of stock listed and traded through the local stock
exchange by residents of the Netherlands, Germany and UK is exempt from percentage tax under Sec.
127(A) of the Tax Code of 1997.

However, in order to avail of the benefits of the tax treaty provision, each non-resident
corporation/individual has to apply for tax treaty relief. Attached herewith is a copy of Revenue
Memorandum Order 10-92 for your guidance. cdphil

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

August 6, 1999

ITAD RULING NO. 016-99

Sec. 106 Sec. 108

206-93 087-97

Embassy of the Sovereign Military Order of Malta

6th Floor, Cattleya Condominium,
235 Salcedo St., Legaspi Village
Makati City

Attention: H.E. Enrique P. Syquia

Ambassador

Gentlemen :

This refers to your letter dated September 2, 1997 to the Department of Foreign Affairs (DFA),
regarding the request of the Embassy of the Sovereign Military Order of Malta (SMOM) for a
Certification of Value-added Tax (VAT) Exemption.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 73
 In reply, please be informed that while Article 34 of the Vienna Convention on Diplomatic
Relations of 1961 exempts diplomatic agents from all dues and taxes, personal or real, national, regional
or municipal, they are nevertheless subject to the indirect taxes of a kind which are normally incorporated
in the price of goods or services, e.g., ad valorem tax and VAT. Nevertheless, under the principle of
reciprocity, this Office may grant tax exemption to the embassy of a foreign state and to the members of
diplomatic missions on their local purchases of goods and services, provided that they can submit to the
Commissioner of Internal Revenue or his duly authorized representative a copy of the special legislation or
international agreement showing that the said foreign government allows similar tax exemptions to the
Philippine Embassy or its personnel on their purchases of goods or services in that foreign country. (BIR
Ruling No. 206-93 dated May 11, 1993) LexLib

However, as per the letter dated February 1, 1999 submitted by the Office of Protocol of the DFA
to this Office, SMOM is not included among the list of diplomatic missions entitled to VAT exemption in
the Philippines on the basis of reciprocity.

This considering, it is required that a DFA certification to the effect that indirect tax (e.g. VAT)
exemption is granted to the members of diplomatic missions of the Philippines in SMOM be secured,
before the same privilege of exemption from payment of VAT can be accorded the members of SMOM's
diplomatic missions in the Philippines. (BIR Ruling 087-97 dated August 5, 1997) prcd

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

August 6, 1999

ITAD RULING NO. 015-99

Sec. 106 Sec. 108

Embassy of Israel
23rd Floor Trafalgar Plaza
105 H.V. dela Costa Street
Salcedo Village, Makati City

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 74
 Gentlemen :

This refers to your letter dated April 14, 1999 which was referred to this Office by the Department
of Foreign Affairs relative to your request for exemption from the value-added tax (VAT) on your local
purchases of goods and services in the Philippines. LexLib

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services Cdpr

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from the
value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value-added tax prescribed under Sections 106
and 108, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant tax exemption to the Embassy of
the State of Israel or its personnel on their local purchases of goods and services, it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country.

Hence the local purchase of goods and services by your Embassy is exempt from the value-added
tax. LexLib

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

July 28, 1999

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 75
 ITAD RULING NO. 014-99

RP-Japan Art. 10

AVC Chemical Corporation

7th Floor, Padilla Building, Emerald Avenue,
Pasig, Metro Manila

Attention: Mr. Ernesto E. Lichauco

President

Gentlemen :

This refers to your letter dated June 1, 1999 requesting for the renewal of the authority previously
granted by this Office on April 13, 1994 (photocopy attached) relative to the availment of the preferential
tax treaty rate of ten per cent (10%) on dividend remittances by AVC CHEMICAL CORPORATION
(AVC) to ISHIHARA SANGYO KAISHA LTD. (ISHIHARA), pursuant to the RP-Japan Tax Treaty.

It is represented that ISHIHARA is a non-resident foreign corporation duly organized and existing
under the laws of Japan; that it is not registered either as a corporation/partnership in the Philippines as per
certification dated May 19, 1999 issued by the Securities and Exchange Commission; that AVC is a
corporation duly organized and existing under the laws of the Philippines; that ISHIHARA holds thirty
per cent (30%) of the total subscribed and paid-up capital of AVC; that on April 05, 1999, the Board of
Directors of AVC approved the declaration of cash dividend of P4.00 per share, payable to all qualified
stockholders of record as of April 30, 1999, payable on or before May 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. LibLex

“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 per cent 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) ...

“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.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 76
 xxx xxx xxx

In view of the foregoing, and, since ISHIHARA SANGYO KAISHA LTD. holds thirty per cent
(30%) of the total subscribed and paid-up capital of AVC CHEMICAL CORPORATION, your request for
the renewal of your previous authority to avail of the preferential tax treaty rate of ten per cent (10%) on
the dividend under consideration is hereby granted.

This approval shall be valid for all dividends payable to ISHIHARA SANGYO KAISHA LTD.
under similar circumstances from April 15, 1999 to April 15, 2002, unless otherwise earlier revoked by
this Office.

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. cdrep

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

July 28, 1999

ITAD RULING NO. 013-99

Section 106 Section 108

206-93

The People's Bureau of the Great Socialist

People's Libyan Aarab Jamahiriya
Makati City, Philippines

Gentlemen :

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 77
 This refers to your Note No. 043-97 dated September 12, 1997, which was referred to this Office by
the Department of Foreign Affairs requesting for the issuance of a Tax Exemption Certificate for the
official use of your Office. prcd

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations pertinent portion of which reads:

"ARTICLE 34

“A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

“(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services

xxx xxx xxx

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value-added tax (VAT) on its local purchase of goods and services. In other words, purchase by the
People’s Bureau of the Great Socialist People’s Libyan Arab Jamahiriya of goods and/or services shall be
subject to the value-added tax prescribed under Section 106 and 108, both of the National Internal
Revenue Code of 1997. Cdpr

However, under the principle of reciprocity, this Office may grant tax exemption to the embassy of
a foreign state or its personnel on their local purchase of goods and/or services it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country (BIR Ruling 206-93
dated May 11, 1993).

Hence, the People’s Bureau of the Great Socialist People’s Libyan Arab Jamahiriya is entitled to
VAT exemptions on their local purchases of goods and/or services.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 78
 July 26, 1999

ITAD RULING NO. 012-99

Sec. 106 Sec. 108

206-93

Embassy of the Republic of Italy

Metro Manila, Philippines

Attention: Mr. Andreas Ferrarese

Charge d' Affaires a. i.

Gentlemen :

This refers to your letter dated June 15, 1999, requesting for exemption from value-added tax
(VAT) on the purchase of one (1) unit white TOYOTA HILUX DIESEL 4X4, 1999 Model with Engine
No. 3L-4758705 and Chassis No. LN166-0027823 for the official use of the Italian Cooperation for
Development Unit, Embassy of the Republic of Italy, for the project "Assistance to the National
Tuberculosis Control Programme." LexLib

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"Article 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services;

xxx xxx xxx

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value-added tax prescribed under Sections 106
and 108, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of
the Republic of Italy or its personnel on their local purchases of goods and/or services it appearing from
the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country.

Hence, the local purchase of one (1) white TOYOTA HILUX DIESEL 4X4, for the official use of
the Italian Cooperation for Development Unit, Embassy of the Republic of Italy is exempt from VAT. LibLex

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 79
 Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

July 26, 1999

ITAD RULING NO. 011-99

Section 106 Section 108

206-93

Embassy of the Russian Federation

Makati City, Philippines

Attention: Mr. Vladimir Brusentsev

Attache

Gentlemen :

This refers to your letter dated May 18, 1999, requesting for exemption from value added tax
(VAT) on the purchase of one (1) unit Honda City 1.3 LXi M/T, 1999 Model with Engine No.
P3RD1-P201153 and Chassis No. PAD3A 1530WV001142 for the personal use of Mr. Vladimir
Brusentsev, Attache, Embassy of the Russia Federation. cdll

In reply, please be informed that pursuant to Article 43 of the Vienna Convention On Diplomatic
Relations, pertinent portions of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional, or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 80
 xxx xxx xxx

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106
and 108, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of
the Russian Federation or its personnel on their local purchases of goods and/or services it appearing from
the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country (BIR Ruling No.
206-93 dated May 11, 1993). cdll

Hence, the local purchase of one (1) Honda City 1.3 LXi 1999 Model, for the personal use of Mr.
Vladimir Brusentsev is exempt from VAT.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

June 22, 1999

ITAD RULING NO. 010-99

RP-Netherlands Article 11

Mr. Ayasamy Ramajillu

Financial Controller and Vice President
Philips Semiconductors Phils., Inc.
Cabuyao, Laguna
PHILIPPINES

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 81
 Sir:

This pertains to your letters dated 26 January 1999 and 26 March 1999 requesting for three (3) year
extension of the approval issued to you by this Office dated 10 June 1998 granting the 15 percent
preferential tax rate on interest payments by your Company to Koninklije Philips Electronics N.V. of the
Kingdom of the Netherlands in accordance with the Philippines-Netherlands Tax Treaty.

Documents disclosed that Koninklije Philips Electronics N.V. (KPEN) is a non-resident foreign
corporation organized and existing under the laws of the Netherlands with principal address at
Groenewoudsewg 1, 5621 BA Eindhoven, Netherlands; that it has no permanent establishment in the
Philippines as evidenced by its Certificate of Non-Registration from the Securities and Exchange
Commission dated 24 February 1999; that it renewed its Term Loan Agreement dated 3 January 1999 with
its subsidiary, Philips Semiconductors Phils., Inc. (PSPI), a domestic corporation organized and existing
under the laws of the Philippines with principal address at LISP-EPZA, Bo. Diezmo, Cabuyao, Laguna in
the amount of Two Hundred and Fifty Million US Dollars (US$ 250,000,000.00); that the loan has a life
of three (3) years effective from 31 January 1999 to 30 January 2002; and that the proceeds of the loan
shall be used by PSPI to finance its capital equipment investment. prcd

In reply thereto, please be informed that your application for an extension of 3 years of a
preferential tax rate of 15 percent final withholding tax on interest payments under the Term Loan
Agreement dated 3 January 1999 is hereby granted, in accordance with paragraphs 2(b) and 5 of the
Philippines-Netherlands Tax Treaty, as follows:

"Article 11

INTEREST

1. Interest arising in one of the States and paid to a resident of the other State may be taxed
in that other State. llcd

2. However, such interest may also be taxed in the State in which it arises and according to
the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall
not exceed:

a) 10 per cent of the gross amount if such interest is paid:

(i) in connection with the sale on credit of any industrial, commercial or

scientific equipment, or

(ii) on any loan of whatever kind granted by a bank, or any other financial
institution,

(iii) in respect of public issues of bonds, debentures or similar obligations,

b) 15 per cent of the gross amount of the interest in all other cases.

3. ...

4. ...

5. The term "interest" as used in this Article means income from Government securities,
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 82
 bonds or debentures, whether or not secured by mortgage but not carrying a right to participate in
profits, and debt-claims of every kind as well as all other income assimilated to income from money
lent by the taxation law of the State in which the income arises. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article". cdrep

This approval shall be valid for the interest paid during the life of the Agreement with expiry date
on 30 January 2002, unless otherwise earlier revoked by this Office.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

July 20, 1999

ITAD RULING NO. 009-99

RP-Netherlands Art. 21

J.A.C.A. Overgaauw
Director for International Tax Policy and Legislation
Ministry of Finance
The Netherlands

Sir:

This refers to your letter — IFZ99/87 M dated January 26, 1999 informing us on the
guidelines/procedure on how residents of the Philippines can claim refund of Dutch dividend tax, and the
introduction of euro currency in your country. However, as mentioned in your letter dated January 26,
1999, the said new euro currency may affect Art. 21, Paragraph 1 (b)(ii) of the RP-Netherlands Tax
Convention, which states that:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 83
 "xxx xxx xxx

any remuneration for personal services performed in the first-mentioned State in an amount
not in excess of 5,000 guilders or the equivalent in Philippine currency, as the case may be, for any
taxable year. cdtai

xxx xxx xxx"

You suggested that in the said Article, guilder can be read as euro taking into account the exchange
rate of the euro vis a vis the guilder. We propose, however, that a protocol be made on the said change.

In a previous letter - IFZ98/968 U you requested information on two subjects, namely:

(a) Philippine revenue regulations for the implementation of the RP-Netherlands Tax
Convention; and,

(b) possible reduction of or exemption from inheritance tax based on reciprocity of

Philippine and Dutch organizations established primarily for purposes of public benefit
in connection with a legacy made by a resident of the Netherlands to St. Michael’s
College, Cantillan, Surigao del Sur.

In reply, please be informed that, as regards the first subject, we have no revenue regulation for the
implementation specifically of the RP-Netherlands Tax Convention. However, for your reference, we have
Revenue Memorandum Order No. 10-92 ( a copy of which is attached herewith) dealing with procedures
for tax treaty relief applications and processing thereof.

As to the second subject, a letter in response to the said query (dated October 1998) had already
been made, a copy of which is also attached herewith. LibLex

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

July 20, 1999

ITAD RULING NO. 008-99

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 84
 RP-Japan Art. 10

Juntec Corporation
Block 5, Lot 7, LIIP-PEZA
Bo. Mamplasan, Biñan,
Laguna, Philippines

Attention: Nilo A. Alinsangan

Managing Director

Gentlemen :

This refers to your application for relief from double taxation dated 22 March 1999 on behalf of
HONKO SEIKOSHO CO., LTD., requesting for a preferential tax rate of ten per cent (10%) to be
withheld on dividend remittances by JUNTEC CORPORATION pursuant to the RP-Japan Tax Treaty.

It is represented that HONKO SEIKOSHO CO., LTD. is a non-resident foreign corporation duly
organized and existing under the laws of Japan, with no permanent establishment here, while JUNTEC
CORPORATION is a domestic corporation organized and existing under the laws of the Philippines; that
HONKO SEIKOSHO CO., LTD. holds ninety nine and 99/100 per cent (99.99%) of the capital stock of
JUNTEC CORPORATION; that on 19 December 1998, the Board of Directors of the latter passed and
approved the declaration of cash dividend in the amount of P3,000,000.00 from its unrestricted retained
earnings, payable to the stockholders of record as of 31 July 1998. cdtai

Based on the foregoing, you now request that the preferential rate of ten per cent (10%) under the
RP-Japan Tax Treaty be applied on the dividend remittances of JUNTEC CORPORATION.

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; cdrep

xxx xxx xxx

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.”

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 85
 In view of the foregoing, your application is hereby approved. Hence, the preferential rate to be
withheld by JUNTEC CORPORATION on its dividend remittances to HONKO SEIKOSHO is ten per cent
(10%) considering that the latter holds ninety nine and 99/100 per cent (99.99%) of the voting shares of the
former.

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. llcd

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

May 31, 1999

ITAD RULING NO. 007-99

Sec. 107 Sec. 109 000-00

Romulo, Mabanta, Buenaventura

Sayoc & De Los Angeles Law Offices
30th Floor, Citibank Tower, Citibank Plaza,
8741 Paseo de Roxas, Makati City

Attention: Atty. Edmundo P. Guevarra

and
Atty. Jayson L. Fernandez

Gentlemen :

This refers to your letter dated 14 August 1998 requesting in effect for a confirmation of your
opinion that the ground equipment, spare parts, engines, fuel, lubricants and other consumable technical
supplies which are brought into the Philippines by the United Parcel Service Co. (UPSCo) exclusively for
the servicing, maintenance, use or repair of its aircraft are exempt from all taxes and duties imposed under
the National Internal Revenue Code of 1997 and the Tariff and Customs Code pursuant to Article 9 of the
RP-US Air Transport Agreement dated September 16, 1982, as amended, and Article 24 of the Convention
of International Civil Aviation which was signed at Chicago on December 7, 1944. cdasia

It is represented that UPSCo is a foreign corporation organized and existing under the laws of the

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 86
 State of Delaware, U.S.A. with a branch office in the Philippines; that said corporation is licensed by the
Philippine Securities and Exchange Commission (SEC) to coordinate the movement of air freight and to
carry property, cargo, and mail as a certificated international US carrier in the Philippines; that UPSCo is a
wholly-owned subsidiary of United Parcel Services of America, Inc. (UPS), one of the largest package
distribution companies in the world specializing in express “door-to-door” delivery services; that UPSCo
maintains a fleet of aircraft which transport property, cargo and mail belonging to UPS’ customers to and
from different parts of the world; that it is a holder of an Air Carrier Operating Permit and a Certificate of
Public Convenience and Necessity issued by the U.S. Department of Transportation; that UPSCo has been
officially designated by the U.S. Government to operate all cargo services on US route No. 3 to and from
the Philippines pursuant to Article 3 of the RP-US Air Transport Agreement; that it has been issued a
Temporary Operating Permit by the Philippine Civil Aeronautics Board, pending the approval of its
Foreign Air Cargo Carriers’ Permit; that its flights to the Philippines constitute UPS’ aircraft connection to
its Asia-Pacific air network; that in order to ensure the airworthiness and safety of UPSCo's aircraft at all
times during the course of its operations, it will become necessary for UPSCo to import and maintain in
the Philippines an inventory of ground equipment, spare parts, engines, fuel, lubricants and other
consumable technical supplies not generally available in the Philippines to allow for the timely servicing,
maintenance, use or repair of its aircraft so it could continue its voyage; and that the ground equipment,
spare parts to be brought into the Philippines by UPSCo will be for the exclusive use of UPSCo's aircraft
only. cdlex

In reply, please be informed that Article 9 of the Air Transport Agreement between the United
States of America and the Government of the Republic of the Philippines dated September 16, 1982, as
amended, provides, viz:

"Article 9

"Customs and Duties

"(1) On arriving on the territory of one Party, aircraft operated in international air
transportation by the designated airlines of the other Party, their regular aircraft equipment, fuel,
lubricants, consumable technical supplies, spare parts, including engines, aircraft stores (including but
not limited to such items as food, beverages and liquor, tobacco and other products destined for sale
to use or by passengers in limited quantities during the flight), and other items intended for or used
solely by the designated airlines in connection with the operation or servicing of aircraft engaged in
international air transportation shall be exempt, on the basis of reciprocity, from all import
restrictions, property taxes and capital levies, customs duties, excise taxes, import taxes and similar
fees and charges imposed by the national authorities, and not based on the cost of services provided,
provided such equipment and supplies remain on board the aircraft. LexLib

"(2) There shall also be exempt, on the basis of reciprocity, from the taxes, duties, fees and
charges referred to in paragraph 1 of this Article, with the exception of charges based on the cost of
the services provided, as follows:

"b) ground equipment and spare parts including engines introduced into the territory of a
Party for the servicing, maintenance or repair of aircraft of a designated airline of the other Party used
in international air transportation; and

"(c) fuel, lubricants and consumable technical supplies introduced into or supplied in the
territory of a Party for use in an aircraft of a designated airline of the other Party engaged in
international air transportation, even when these supplies are to be used on a part of the journey

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 87
 performed over the territory of the Party in which they are taken on board. Cdpr

Finally, Section 109 (q) of the National Internal Revenue Code of 1997 provides in part as follows:

"Section 109

"Exempt Transactions

The following shall be exempt from the value-added tax:

xxx xxx xxx

(q) Transactions which are exempt under international agreements to which the Philippines
is a signatory or under special laws, except those under Presidential Decree Nos. 66, 529 and 1590;"

Considering that the Government of the United States of America is a signatory to the said Air
Services Agreement with the Philippines, UPSCo, being a corporation organized and existing under the
laws of the U.S.A, shall enjoy exemption from taxes specified under paragraph 1, Article 9 of the
R.P.-U.S.A. Air Transport Agreement, including the Value-Added Tax on importations imposed under
Section 107 of the Tax Code. cdll

In view of all the foregoing, this Office is of the opinion as it hereby holds that the regular aircraft
equipment, spare parts, engines, fuel, lubricants and other consumable technical supplies which are
brought into the Philippines by UPSCo exclusively for the servicing, maintenance, use or repair of its
aircraft engaged in international air transportation are exempt from all taxes, provided that such equipment
and supplies remain on board the aircraft.

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, this ruling shall be considered null and void.
cdasia

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

July 20, 1999

ITAD RULING NO. 006-99

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 88
 RP-Japan-Art. 11
142-95

Juntec Corporation
Block 5, Lot 7, LIIP-PEZA
Bo. Mamplasan, Biñan, Laguna

Attention: Nilo A. Alinsangan

Managing Director

Gentlemen :

This refers to your letter dated 22 March 1999 requesting a ruling to the effect that the interest
income to be remitted by JUNTEC CORPORATION (JUNTEC) to HONKO SEIKOSHO CO., LTD.
(HONKO) shall be subject to fifteen per cent (15%) pursuant to the RP-Japan Tax Treaty.

It is represented that HONKO is a non-resident foreign corporation, duly organized and existing
under the laws of Japan; that it is not registered either as a corporation/partnership in the Philippines as per
certification dated 22 March 1999 issued by the Securities and Exchange Commission; that JUNTEC is a
corporation duly organized and existing under the laws of the Philippines; that on 21 March 1997, a Loan
Agreement was entered into by and between HONKO and JUNTEC whereby the former made a loan to
the latter in the amount of JPY173,067,424.00 or P42,159,225.00 payable within a period of seven (7)
years at an interest rate of 5.883% per annum on the outstanding balance of the principal. LexLib

In reply, please be informed that Article 11 of the RP-Japan Tax Treaty provides as follows:

"Article 11

"1. Interest arising in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other Contracting State.

"2. However, such interest may also be taxed in the Contracting State in which it arises, and
according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
interest the tax so charged shall not exceed:

a) 10 per cent of the gross amount of the interest if the interest is paid in respect of
Government securities, or bonds or debentures;

b) 15 per cent of the gross amount of the interest in all other cases.

xxx xxx xxx

"5. The term "interest" as used in this Article means income from debt-claims of every kind,
whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from Government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or debentures. llcd

xxx xxx xxx"

Such being the case, the interest income to be remitted by JUNTEC CORPORATION to HONKO

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 89
 SEIKOSHO CO., LTD. relative to the aforementioned loan shall be subject to the preferential tax rate of
15% (as per BIR Ruling No. 142-95, dated 13 September 1995).

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. LexLib

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

June 16, 1999

ITAD RULING NO. 005-99

RP-Japan Article 11

Mr. Yoshimi Muto

President
Imasen Philippines Manufacturing Corporation
101 East Main Ave., Laguna Technopark
Biñan, Laguna
PHILIPPINES

Sir:

This refers to your letter dated 8 March 1999 requesting for a ruling to the effect that the interest
payments to be made by Imasen Philippines Manufacturing Corporation (IPMC) to Imasen Electric
Industrial Co., Ltd. (Imasen Japan) shall be subject to 15% pursuant to the RP-Japan Tax treaty.

It is represented that Imasen Japan is a non-resident foreign corporation organized and existing
under the laws of Japan with principal address at No. 1 Aza-Kakihata, Inuyama, Aichi Pref., Japan; that it

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 90
 has no permanent establishment in the Philippines as evidenced by its Certificate of Non-Registration from
the Securities and Exchange Commission dated 6 April 1999; that a Loan Agreement was entered into by
and between Imasen Japan and its subsidiary, IPMC, with principal address at No. 101 East Main Ave.,
Laguna Technopark, Biñan, Laguna in the amount of One Hundred and Twenty Million Japanese Yen
(JPY 120,000,000); that the loan has a life of eight (8) years and six (6) months effective from 9 December
1997 to June 2006 inclusive of 4 years grace period; that the rate of interest shall be two and one-half
percent (2.5%) per annum payable semi-annually without need of demand; and that the principal shall be
paid in ten (10) semi-annual installments in Japanese currency at the end of June and at the end of
December with the first payment to be made at the end of December 2001; and that the proceeds of the
loan shall be used by IPMC to acquire machineries and equipment for its operations. cdasia

In reply thereto, please be informed that Article 11 of the RP-Japan Tax Treaty provides, viz:

"Article 11

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other Contracting State.

2. However, such interest may also be taxed in the Contracting State in which it arises, and
according to the laws of that Contracting State, but if the recipient is the beneficial owner of the
interest the tax so charged shall not exceed:

a) 10 per cent of the gross amount of the interest if the interest is paid in respect of
Government securities, or bonds or debentures; llcd

b) 15 per cent of the gross amount of the interest in all other cases."

3. ...

4. ...

5. The term "interest" as used in this Article means income from debt-claims of every kind,
whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from Government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or debentures".

Such being the case, interest payments to be made by IPMC to Imasen Japan shall be subject to
15% income tax based on the gross amount of the interest pursuant to Article 11(2)(b) of the RP-Japan
Tax Treaty.

This ruling is being issued on the basis of the foregoing facts as represented. However, if upon
investigation, it shall be disclosed that the facts are different, then this ruling is considered null and void.
cdtai

Very truly yours,

(SGD.) BEETHOVEN L. RUALO

Commissioner
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 91
 July 8, 1999

ITAD RULING NO. 004-99

Section 106 (A)

Section 108
Section 149
DA 177-99

British Embassy
17/F Locsin Bldg.,
6752 Ayala Avenue,
Makati City

Attention: Mr. A R M Dent

Management Officer

Gentlemen :

This refers to your Note No. 61-99 dated May 26, 1999, requesting for exemption from value-added
tax (VAT) and ad valorem tax on the purchase of one (1) unit Honda City 1.3 A/T, 1999 Model with
Engine No. P3RD6-P200933 and Chassis No. PAD3A 1640WV000954 for the personal use of Mr.
Michael Delaney, Third Secretary Immigration of the British Embassy, Manila.

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services cdll

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value-added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value-added tax prescribed under Sections 106
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 92
 (A) and 108 and ad valorem tax prescribed under Section 149 of the National Internal Revenue Code of
1997.

However, under the principle of reciprocity, this Office may grant exemptions to the British
Embassy or its personnel on their local purchases of goods and/or services it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchases of goods and services in your country. (BIR VAT Ruling
No. DA-177-99) cdtai

Such being the case, the local purchase of one (1) unit 1999 Honda City 1.3 A/T for the personal
use of Mr. Michael Delaney, Third Secretary Immigration of the British Embassy, Manila is exempt from
the value-added tax and ad valorem tax.

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

July 8, 1999

ITAD RULING NO. 003-99

Section 106 (A) Section 108 Section 149

DA 177-99

British Embassy
17/F Locsin Bldg.,
6752 Ayala Avenue,
Makati City

Attention: Mr. A R M Dent

Management Officer
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 93
 Gentlemen :

This refers to your Note No. 60-99 dated May 26, 1999, requesting for exemption from value-added
tax (VAT) and ad valorem tax on the purchase of one (1) unit Honda City 1.3 A/T, 1999 Model with
Engine No. P3RD6-P200950 and Chassis No. PAD3A 1640WV000953 for the personal use of Mrs. Erica
Alexandra Ackerman, Third Secretary Commercial of the British Embassy, Manila.

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services LexLib

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106
(A) and 108 and ad valorem tax prescribed under Section 149 of the National Internal Revenue Code of
1997.

However, under the principle of reciprocity, this Office may grant exemptions to the British
Embassy or its personnel on their local purchases of goods and/or services it appearing from the list
submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Philippine Embassy personnel on their purchase of goods and services in your country. (BIR VAT Ruling
No. DA-177-99)

Such being the case, the local purchase of one (1) unit 1999 Honda City 1.3 A/T for the personal
use of Mrs. Erica Alexandra Ackerman, Third Secretary Commercial of the British Embassy, Manila is
exempt from the value-added tax and ad valorem tax. LexLib

Very truly yours,

Commissioner of Internal Revenue

By:

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 94
 June 23, 1999

ITAD RULING NO. 002-99

Sec 106
Sec 108

Embassy of the Russian Federation

Metro Manila, Philippines

Attention: Vladimir A. Proskouriakov

Third Secretary

Gentlemen :

This refers to your letter dated May 18, 1999 requesting for exemption from value added tax (VAT)
on the purchase of one (1) unit locally purchased Honda City 1.3 Lxi, Model 1999 (4 door sedan, gas 1.3li.
SOHC, PGM-FI, 5 speed manual transmission, 95 hp) with engine no. P3RD1-P201145 and chassis no.
PAD3A 1530WV001192 for the personal use of Mr. Vladimir A. Proskouriakov, Third Secretary,
Embassy of the Russian Federation.

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services cdll

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106
and 108, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of
the Russian Federation or its personnel on their local purchases of goods and/or services it appearing from
the list submitted by the Department of Foreign Affairs that your Government allows similar exemption to
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 95
 Philippine Embassy personnel on their purchase of goods and services in your country.

Hence, the local purchase of one (1) Honda City '99 1.3 LXi 4-dr Sedan, for the personal use of Mr.
Vladimir Proskouriakov is thereby exempt from VAT. prcd

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

June 24, 1999

ITAD RULING NO. 001-99

Sec 106
Sec 108

Embassy of the Federal Republic of Nigeria

Metro Manila, Philippines

Attention: Abdul M. Salisu

Counsellor

Gentlemen :

This refers to your letter dated June 04, 1999 requesting for exemption from value added tax (VAT)
on the purchase of one (1) unit locally purchased Honda CRV 2.0 M/T, 1999 Model (5 door sedan, gas,
2.0Li SOHC, PGM-FI, 5 speed manual transmission, 145 hp) with engine no. PEWD2-P100984 and
chassis no. PADRD 1720WV000991 for the personal use of Mr. Abdul M. Salisu, Counsellor, Embassy of
the Federal Republic of Nigeria. llcd

In reply, please be informed that pursuant to Article 34 of the Vienna Convention on Diplomatic
Relations, pertinent portion of which reads:

"ARTICLE 34

"A diplomatic agent shall be exempt from all dues and taxes, personal or real, national,
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 96
 regional or municipal, except:

"(a) indirect taxes of a kind which are normally incorporated in the price of the goods and
services

"xxx xxx xxx"

the tax exemption privilege of an Embassy and its diplomatic agents does not include exemption from
value added tax (VAT) on its local purchases of goods and services. In other words, purchases by that
Embassy of goods and/or services shall be subject to the value added tax prescribed under Sections 106
and 108, both of the National Internal Revenue Code of 1997.

However, under the principle of reciprocity, this Office may grant exemptions to the Embassy of
the Federal Republic of Nigeria or its personnel on their local purchases of goods and/or services it
appearing from the list submitted by the Department of Foreign Affairs that your Government allows
similar exemption to Philippine Embassy personnel on their purchase of goods and services in your
country.

Hence, the local purchase of one (1) Honda CRV '99 2.0 LXi 5-dr Sedan, for the personal use of
Mr. Abdul M. Salisu is thereby exempt from VAT. cdll

Very truly yours,

(SGD.) SIXTO S. ESQUIVIAS IV

Deputy Commissioner
Legal and Enforcement Group
Bureau of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia (2017.1) 97