China–Philippines Tax Treaty Benefits: How Nonresidents Claim Relief

The China–Philippines tax treaty benefits are not automatic. A nonresident income earner from China who wants to be taxed at a preferential treaty rate on Philippine-source income must file a Tax Treaty Relief Application (TTRA) with the Bureau of Internal Revenue, and it must be filed before the transaction — meaning before the first taxable event occurs. Under Revenue Memorandum Order No. 72-2010, the application is filed exclusively with the BIR's International Tax Affairs Division (ITAD). Filing with any other BIR office makes the application improperly filed, and failure to file on time disqualifies it.

What treaty relief actually does

The Philippines taxes income from sources within the country. A tax treaty does not erase that tax; it limits the rate the Philippines may impose on a resident of the other contracting state, and it allocates taxing rights between the two countries. The benefit is a preferential rate — for example, a reduced rate on dividends, interest, or royalties — instead of the regular domestic rate.

To claim it, the income earner must show that the treaty applies to the specific transaction. That is what the TTRA process establishes. The BIR issues a ruling confirming the applicable treaty treatment.

Who files and where

The applicant may be the income earner or a duly authorized representative. The application is submitted to The Chief, International Tax Affairs Division. All rulings on the application, implementation, and interpretation of Philippine tax treaties emanate from ITAD.

The forms you need

RMO No. 72-2010 adopts specific BIR forms depending on the type of income:

• BIR Form No. 0901-P — Business Profits
• BIR Form No. 0901-T — Profits from Shipping and Air Transport
• BIR Form No. 0901-D — Dividend Income
• BIR Form No. 0901-I — Interest Income
• BIR Form No. 0901-R — Royalty Income
• BIR Form No. 0901-C — Capital Gains
• BIR Form No. 0901-S — Income from Services
• BIR Form No. 0901-O — Other Income Earnings

These forms superseded BIR Form No. 0901 and BIR Form No. 1928 under earlier issuances.

General documentary requirements

Under Section 3 of RMO No. 72-2010, every TTRA must be accompanied by three copies of the accomplished form and the following general requirements:

1. Proof of Residency. An original consularized certification from the tax authority of the income earner's country, confirming residency for purposes of the treaty invoked in the taxable year concerned.
2. Articles of Incorporation for corporate income earners, with a consularized certification that the copy is faithful.
3. Special Power of Attorney where a withholding agent or local representative files on the income earner's behalf, duly consularized.
4. Certification of Business Presence in the Philippines — from the SEC for corporations or partnerships, or the DTI for individuals.
5. Certificate of No Pending Case — a sworn statement on whether the transaction is under investigation, audit, protest, refund claim, collection, or judicial appeal.

Additional documents apply depending on the income type. Dividend applications, for instance, require a notarized Corporate Secretary certification on the dividend declaration, shares, ownership percentage, and acquisition details. Royalty applications require the notarized royalty, technology transfer, or licensing agreement, among others.

When and how the BIR acts

Filing must be made before the first taxable event — generally the first time the income payor is required to withhold tax. For capital gains applications, filing is required before the due date of the documentary stamp tax on the sale of shares.

Within seven (7) working days from receipt, ITAD notifies the filer of any lacking, missing, or insufficient documents. The filer then has fifteen (15) working days from receipt of the notice to comply. Failure to submit on the designated date causes the TTRA to be archived, without prejudice to re-filing.

For rulings on the use of preferential rates, the ruling must be available for release after sixty (60) working days from receipt of the TTRA or of the complete documentary requirements, whichever comes later. Where there is no issue on income characterization, the period is thirty (30) working days.

A ruling adverse to the nonresident income earner may be elevated to the Secretary of Finance within thirty (30) days from receipt, in accordance with Department Order No. 23-01. No motion for reconsideration is entertained by the BIR.

Frequently asked questions

Is the China–Philippines tax treaty benefit automatic? No. The income earner must file a Tax Treaty Relief Application with ITAD and secure a ruling confirming the preferential treatment.

Can I file the TTRA after the transaction? No. Filing must be made before the transaction, or before the first taxable event. Late filing disqualifies the application.

Where do I file the TTRA? Only with the International Tax Affairs Division. Filing with any other BIR office renders the application improperly filed.

Practical takeaways

• File the TTRA before the transaction — ideally well ahead of the first withholding event.
• Submit to ITAD only; other BIR offices cannot receive it.
• Prepare consularized documents early, especially proof of residency and any special power of attorney.
• Respond to ITAD's notice of deficiencies within fifteen (15) working days to avoid archiving.
• Expect the ruling within thirty (30) or sixty (60) working days depending on whether income characterization is at issue.

Primary sources

The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.

RR No. 11-2018 — Amends certain provisions of RR No. 2-98, as amended, to implement further amendments introduced by RA No. 10963 (TRAIN Law) relative to withholding of Income Tax (Published in Manila Bulletin on March 19, 2018) Digest | Full Text | Annex A | Annex B-1 | Annex B-2 | Annex B-3 | Annex C | Annex D | Annex E | Annex FOpen in Law LibraryDownload PDF

RMO No. 72-2010 — Prescribes the guidelines on the processing of Tax Treaty Relief Applications pursuant to existing Philippine Tax Treaties Digest | Full Text | Annex A | Annex B | Annex C | Annex D | FormsOpen in Law LibraryDownload PDF

• REPUBLIC ACT NO. 10963 - AN ACT AMENDING SECTIONS 5,6, 24,25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107,108,109,110,112,114,116,127,12S, 129, 145, 148,149,151,155,171,174,175,177,178,179,180, 181, 182, 183,186,188,189,190,191,192, 193,194,195, 196, 197,232, 236,237,249, 254, 264,269, AND 288; CREATING NEW SECTIONS 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, AND 265-A; AND REPEALING SECTIONS 35,62, AND 89; ALL UNDER REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.