Reminder on request for confirmation required for availing of tax treaty benefits in 2020 and prior year income payments due on Dec. 29, 2021

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THE Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) 14-2021 and Revenue Memorandum Circular 77-2021 to remind all concerned taxpayers on the requirement for availing of tax treaty benefits under the streamlined procedures and documents.

Under RMO 14-2021, a request for confirmation (RFC) or tax treaty relief application (TTRA) shall apply to all income derived by nonresidents from Philippine sources that may be entitled to relief from double taxation under relevant tax treaties. The submission of Certificate of Residence for Treaty Relief (CORTT) Form for dividends, interest and royalties shall be discontinued.

For nonresident who has income in 2020 and prior years subjected to treaty rates, but no TTRA or CORTT Form was filed therefore, the withholding agent has until the last working day of this year (Dec. 29, 2021) to file an RFC with complete documentary requirements.

Failure to file the same within the prescribed deadline would be subject to administrative penalties under Sections 250 and 255 of the Tax Code. Moreover, a penalty of P1,000 per failure to file a CORTT Form for dividends, interests and royalties paid after the effectivity of RMO 8-2017 until Dec. 31, 2020 shall be imposed.

If the RFC or TTRA is approved, the BIR will issue a Certificate of Entitlement (COE) instead of the usual BIR Ruling. The COE will still contain the material facts of the case and a ruling confirming the non-residents’ entitlement to treaty benefit.

Applications with incomplete documents will not be accepted by the International Tax Affairs Division.

In meritorious cases, the nonresident or withholding agent may be granted an extension within which to submit the required documents but in no case shall it exceed 30 days.

Please be guided accordingly.

Source:

P&A Grant Thornton

Certified Public Accountants

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