RR No. 11-2022 — Prescribes the guidelines and procedures for the spontaneous exchange of taxpayer specific rulings (Published in Business World on July 8, 2022) Digest | Full Text | Annex A | Annex B

REPUBLIC OF THE PHILIFPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

..JUN...2022

REVENUE REGULATIONS NO t1- 2022

SUBJECT: Prescribing the Guidelines and Procedures tor the Spontaneous Exchange of Taxpayer Specific Rulings TO: All Internal Revenuc Officers and Others Concerned

Section 1. Background

rulings that have been granted to a foreign related party or a permanent estabtishment (Pt:) of their resident taxpayer. which can be used in conducting risk assessments. The absence of such information exchange could give rise to base erosion and profit shifting ("-BiP$") concerns. "transparency framework") provides tax administrations with access to timely information on Spontaneous exchange of rclevant information on taxpayer-specific rulings (the

information must be exchanged with all potential exchange jurisdictions. inctuding the country exchange ot information agreements. such as Double Taxation Agreements (DrAs). Tax of residence of the immediate parent company and uttimatc parent company rulings. pursuant to pre-defined periods. The exchanges are made pursuant to international Information Exchange Agreements (TIEAs) or the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC). which provide for the legal conditions under which the exchanges take piace. including the need to ensure taxpayer confidentiality. The : The spontaneous exchange of rulings covers certain past rulings as well as future

Section 2. Domestic Legal Framework for Exchanging Information on Ralings

of its DTAs. which mandates the competent authorities of the contracting states io exchange includes all types of exchanges, be it upon request. automatic or spontaneous such information as is necessary for carrying out the provisions thereof or of the domestic laws of the Contracting States concerning the taxes to which the DTA applies. The EOI provision In the Philippines. the legal basis for such exchange can be found in the EOl provision

Section 3. Spontaneous Exchange of Rulings to the Potential Exchange Jurisdictions

The Responsible Office

(BIR). through its FOl Section, shall be responsible for exchanging the taxpayer specific rulings to the foreign tax authority of the potential exchange jurisdictions on or before thet prescribed deadline. The International Tax Affairs Division (IAD) of the Bureau of Internal Revenue

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b. Information Subject to the Exchange

The rulings within the scope of the transparency framework include the following:

Hi." cross-border unilateral Advance Pricing Arrangements (APAs) and any other cross- . rulings retated to a preferential regime:

H. cross-border rulings giving a unilateral downward adjustment to the taxpayer's taxable border unilateral tax ruling (such as an Advance Tax Ruting) covering transter pricing or the application of transfer pricing principles

v. , related party conduit rulings. iv. PE rulings: and profits in the country giving the ruling

c. Template for Information Exchange

(FHTP) and the Inclusive Framework on BEPS (Annex A). Revisions of the template shall always be adopted by the Philippines so long as it is practical and not burdensome on the part of the tax administration. The Philippines shall use the template designed by the Forum on Harmful Tax Practices

d. Potential Exehange Jurisdictions

Type of Ruling Rulings related to certain i. Potential Exchange Jurisdictions The countries of residence of all related parties (a 25%)

pricing (APAS) Unnateral preferential regimes border unitateral rulings I tt. or..other cross- arrangenents advance I i. ii. The residence country of (a) the ultimate parent company a transaction for which a preferential treatment is granted or which gives rise to income from related parties The countries of residence of all related parties with whom The residence country of (a) the ultimate parent company threshold would apply). with which the taxpayer enters into benefiting from a preferential treatment (this rule also) applies in a PE context): and and (b) the immediate parent company the taxpayer enters into transactions that are covered by the APA or cross-border unilateral tax ruling: and

in respect Of transfer and (b) the immediate parent company

Rulings providing for a Ti. Ipricing. I downward adjustment of taxable profits PE rulings ii. The residence country of (a) the uitimate parent company The residence country of the head office, or the country of the taxpayer enters into transactions covered by the ruling. and (b) the immediate parent company The countries of residence of all related parties with whom

rulings Related Darty conduit Hi. The residence country of (a) the ultimate parent company I The country of residence of the ultimate beneficial owner The country of residence of any related party making the PE. as the case may be, and and (b) the immediate parent company payments to the conduit (directly or indirectiv):

(which in most cases will be the ultimate parent company) of payments made to the conduit: and

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I i. To the extent not already covered by f). the residence country of (a) the ultimate parent company and (b) the

immediate parent company

Timeliness of Exchanges

Upon the effectivity of this Regulations, the EOI Section of ITAD shall ensure that the information to be exchanged is transmitted to the relevant jurisdictions in aecordance with the following timelines:

I for past rulings. as soon as possible after identifying the potential exchange

Hi. for future rulings. as soon as possible and no later than three months after the issuanee r jurisdictions: and thereof.

the taxpayer specitic ruling is responded to, or a status update is provided. within 90 days upon receipt of such request. It shall likewise ensure that subsequent requests by another jurisdiction for a copy of

Mode of Exchange

Rutings may either be exchanged via the following modes of exchange:

2. encrypted electronic mail (email). I. registered mail: or

consider the policy of its treaty partners. are password-protected. Moreover. in choosing the mode of exchange, the EOi Section shall The EOl Section shall always ensure that rulings and information provided via email

Section 5. Information Gathering Process

a foreign enterprise in the Philippines that were issued either: framework pertain onty to PE rulings or rulings concerning the existence or absence of a PE ot For the Philippines. past rulings that fall within the scope of the transparency

ji. on or after 1 January 2012 but before 1 January 2015, provided they were still in i. on or after 1 January 2015 but before 1 September 2017: or effect as of I January 20+5.

Future rulings refer to rulings issued after such periods.

Past rulings

Section must apply the "best efforts" approach to identify them. This includes the follow ing: the relevant countries with which the information needs to be exchanged. the Rulings und MAP If the past ruling does not contain sufficient information to enable identification of all

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i. checking of information included in the flic supporting the tax treaty retief

application (the "ruling file"), BIR Form No. 1709. any relevant transfer pricing

ji. obtaining information from the domestic withholding agent. foreign taxpayer or its documentation. if available:

representative in the Philippines, the Securities and Exchange Commission or other

Hii. any other manner leading to the determination of the needed information. possible information holders: and

Assistant Commissioner for Legal Service (ACIR-LS). All requests for information related to exchange of past rulings shall be signed by the

Future rulings

Section 5(b) shall take the necessary measures to ensure that all potential exchange jurisdictions are identified swiftly for all future rulings. This nay reguire the amendment ot the ruling The offices responsible for the issuance of the taxpayer specific rulings mentioned in

when requesting for a confirmatory ruling, and the inclusion of transfer pricing documentation as pari of the documentary requirements, among others. process, if necessary, the amendment of the BIR Forms that must be submitted by the taxpayer

from the domestic and foreign taxpayers to obtain information on the potential exchange confirmatory ruling pursuant to existing revenue issuances. All requests for information related to exchange of future rulings shall be signed by the respective heads of offices. jurisdictions. in addition to the usual documents that must accompany every request tor Nothing shall prevent the Bureau, however, from requesting other relevant documents

a. Rylings originating from the ITAD

the potential exchange jurisdictions shall be the responsibility of the Rulings and MAP Section spontaneous exchange of rulings, and the identification of, and gathering of information on of ITAD. The classification of futurc rulings originating from the ITAD that are subject to the

jurisdictions, the Rulings and MAP Section shall immediately transmit the ruling file to the Eot Section. After classifying the rulings to be exchanged and identifying the potential exchange

b. Other Rulings.

Shall be responsible for ensuring that that all potential exchange jurisdictions are identified swiftly for all future rulings. The office that issued taxpayer specific rulings other than those originating from I'TAD

be transmitted to the EOI Section of I'TAD in a secure manner within thirty (30) days from its alway be made. The ruling file, with a summary of the potential exchange jurisdictions. shall issuance For the purpose of exchanging rulings, coordination between that office and FI AD shall

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Section 6. Review and Supervision Mechanism

The Chief of ITAD shall initially review and supervise the implementation framework to ensure that all relevant information on the identification of rulings and potential exchange jurisdictions is captured adequately.

related to the spontaneous exchange of rulings to the relevant foreign tax authority. The final review shall be done by the ACIR-LS who shall also sign all documents

Section 7. Receipt of Spontaneous Exchange of Rulings from Foreign Tax Jurisdictions

the tax examiners in their tax investigation, a copy thercof shall be immediately forwarded to exchanged by its treaty partners. if it is established, upon evaluation. that the ruling will aid The EOI Section of ITAD shall be responsible for receiving rulings spontaneously

the Revenue District Office (RDO) having jurisdiction of the domestic taxpayer.

the usefulness of the information provided by the foreign tax jurisdiction within thirty (30) days from the termination of the tax investigation. For monitoring purposes, the RDO shall always provide the EOI Section feedback on

Section 8. Confidentiality

confidentiality rules contained in the EOI provision of the DTAs, Section 270 of the National Data Privacy Act of 2012, and of existing revenue issuances. Internul Revenue Code of 1997. as amended. Republic Act No. 10173. otherwise known as the In the spontaneous exchange of tax rulings, the EOI Section shall be guided by the

Section 9. Repealing Clause

All existing revenue issuances or portions thereof inconsistent herewith are hereby revoked and/or amended accordingly.

Section 10. Effectivity

R

newspaper of general circutation. This Regulations shall take effect after fifteen (IS) days following its publication in a

v Secretary of Finance

Recornending Approvat: JUN E 9 2072

owsay

Commissioner of Internal Revenue CAESAR R. DULAY BUREAU OF INTERNAL REVENUE

A 052134 2 JUN 39 2022 Y

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