Tax Treaty Relief in the Philippines: How to Apply with the BIR

A nonresident income earner who wants to be taxed at the preferential rate under a Philippine tax treaty must file a Tax Treaty Relief Application (TTRA) with the Bureau of Internal Revenue. Under Revenue Memorandum Order No. 72-2010, the application must be filed with the International Tax Affairs Division (ITAD) and must be made before the transaction — specifically, before the first taxable event occurs. Filing with any other BIR office, or filing late, disqualifies the application.

What a Tax Treaty Relief Application Is

A TTRA is a request for a BIR ruling confirming that a taxpayer may apply the preferential tax rate or exemption provided in an existing Philippine tax treaty. RMO No. 72-2010 governs how these applications are processed and lists the documentary requirements.

The order defines the first taxable event as the first or only time the income payor is required to withhold income tax on the transaction, or should have withheld it had the transaction been taxed. For capital gains applications, it is before the due date of the documentary stamp tax on the sale of shares.

Which BIR Form to Use

The TTRA form depends on the type of income and the treaty article being invoked. Under Section 2 of RMO No. 72-2010, the following forms are used:

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These forms superseded BIR Form No. 0901 and BIR Form No. 1928 under earlier issuances.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

Section 3 of RMO No. 72-2010 requires three copies of the accomplished TTRA, signed by the income earner or an authorized representative, with the following attachments:

1. Proof of residency — a consularized certification from the tax authority of the income earner's country confirming residency for the tax year covered by the treaty being invoked.
2. Articles of Incorporation — for income earners other than individuals, a photocopy with a consularized certification that it is a faithful reproduction.
3. Special Power of Attorney — a consularized SPA or written authorization where the filer is the withholding agent or local representative. Where the filer is the local representative of the withholding agent, a letter of authorization from the withholding agent is also required.
4. Certification of business presence in the Philippines — from the Securities and Exchange Commission for corporations and partnerships, or from the Department of Trade and Industry for individuals.
5. Certificate of no pending case — a sworn statement on whether the same taxpayer or transaction is under investigation, audit, protest, refund claim, collection, or judicial appeal.

Additional documents are required depending on the treaty article invoked. For example, royalty applications require the notarized royalty, technology transfer, or licensing agreement; dividend applications require a notarized corporate secretary's certificate on the dividend declaration and shareholdings; and capital gains applications carry their own set of requirements.

Where and When to File

Section 14 of RMO No. 72-2010 is strict on both point and timing. All TTRAs must be submitted to and received only by ITAD. Applications filed with any other BIR office are considered improperly filed. Filing must always be made before the transaction, meaning before the first taxable event. Failure to file properly with ITAD within the prescribed period disqualifies the TTRA.

How ITAD Processes the Application

Once ITAD receives the TTRA, it has seven working days to notify the filer of any lacking, missing, or insufficient documentary requirements. The filer then has fifteen working days from receipt of the notice to submit the documents.

If the filer fails to comply, the TTRA is archived. Re-filing is allowed without prejudice, reckoned from the date of the original filing and covering exactly the same transaction, but the filer must submit a copy of the original filing together with complete requirements.

On the ruling itself, Section 15 provides that the ruling must be available for release after sixty working days from receipt of the TTRA or of the complete requirements, whichever comes later. Where there is no issue on income characterization, the period is thirty working days. A ruling adverse to the nonresident income earner may be elevated to the Secretary of Finance within thirty days from receipt.

Frequently asked questions

Can I file my tax treaty relief application after the transaction? No. Under RMO No. 72-2010, filing must be made before the transaction, meaning before the first taxable event. A late filing disqualifies the TTRA.

Where do I submit the TTRA in the Philippines? Only with the International Tax Affairs Division of the BIR. Submission to any other BIR office is treated as improper filing.

What happens if my documents are incomplete? ITAD will notify you within seven working days. You then have fifteen working days to complete the requirements. If you fail to comply, the application is archived and must be re-filed.

Practical takeaways

• File the TTRA with ITAD, never with another BIR office, and always before the first taxable event.
• Choose the correct BIR Form No. 0901 series form based on the type of income and treaty article invoked.
• Prepare three signed copies and complete the general requirements, including the consularized proof of residency and, where applicable, the SPA.
• Respond to any notice of missing documents within fifteen working days to avoid archiving.
• Expect the ruling within sixty working days, or thirty working days where there is no issue on income characterization.

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.

RMC No. 06-2003 — Clarifies certain issues relative to the services rendered by individual professional practitioners, general professional partnerships, entertainers and professional athletes who are subject to the Value-Added Tax or Percentage Tax beginning January 1, 2003 Digest | Full Text | Annex AOpen 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. 590 - AN ACT TO AMEND CERTAIN SECTIONS OF COMMONWEALTH ACT NUMBERED FOUR HUNDRED AND SIXTY-SIX, AS AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE, AND TO ADD TO TITLE II THEREOF A SUPPLEMENT PROVIDING FOR THE WITHHOLDING OF THE INCOME TAX ON WAGES, 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.