REVENUE MEMORANDUM ORDER NO. 8-2017 issued on March 28, 2017 prescribes
the procedures for claiming tax treaty benefits for dividend, interest and royalty income of
non-resident income earners.
The mandatory Tax Treaty Relief Applications (TTRA) shall no longer be filed with
the International Tax Affairs Division (ITAD). In lieu of the TTRA, preferential treaty rates
for dividends, interests and royalties shall be applied and used outright by the withholding
agents upon submission of a Certificate of Residence for Tax Treaty Relief (CORTT)
Form by the non-resident. The use of the preferential rates shall be done through
Withholding Final Taxes at applicable treaty rates.
Non-residents are allowed to use the prescribed certificate of residency of their
country of residence. However, non-residents are still required to accomplish A, B and C
of Part I of the CORTT Form, for monitoring purposes. If the prescribed certificate of
residency is used, it shall be attached to the CORTT Form.
For dividend income purposes, the CORTT Form shall be valid for two (2) years
from date of issuance. However, if a prescribed certificate of residency of the country of
residence is used, the date of validity of the latter document will prevail over the two (2)
year period given. For interest and royalty income purposes, the CORTT Form shall be
valid per contract.
Withholding agents or income payors can withhold at a reduced rate or exempt the
non-resident based on the duly accomplished CORTT Form submitted to them. Failure
to submit a CORTT Form to the withholding agent/income payor would mean that the
non-resident is not claiming any tax treaty relief and, therefore, such income shall be
subject to the normal rate provided under the National Internal Revenue Code (NIRC) of
1997, as amended.
The ITAD and Revenue District Office (RDO) No. 39 shall be in charge of receiving
and recording information stated in the CORTT. Compliance check and post reporting
validation on Withholding Tax obligations and confirmation of appropriateness of
availment of treaty benefits shall be part of BIR’s regular audit investigations conducted
by the RDO where the domestic withholding agent is registered.
Any violation of the provisions of this Order shall be subject to the penalties
provided in Section 250 and other pertinent provisions of the NIRC, as amended.
Failure to supply accurate and complete information in the CORTT Form and BIR
Forms 1601F and 1604-CF will render the non-resident and withholding agent noncompliant. Noncompliance shall be a ground for the denial of the use of preferential treaty
rates and the disallowance of the pertinent expense/s of the withholding agent.
Furthermore, withholding agents/income payors that willfully fail to pay any tax,
make a return, keep any record, or supply correct and accurate information or withhold or
remit taxes withheld, or aids or abets any manner to evade any such tax or the payment
thereof shall be liable under Sections 251 and 255 of the NIRC.
Non-residents who already filed TTRAs with the BIR on dividend, interest and
royalty income prior to the effectivity of this Order will be allowed to use the tax treaty
rates invoked based on effective tax treaties of the Philippines with other countries.
However, the same will be subjected to compliance check.
For existing TTRAs with the BIR with supporting documents, ITAD will use the
submitted information in creating a database for purposes of tax treaty relief availment. If
the requisite certificate of residency is not available in the submitted documents, the
withholding agents/income payor will be requested to submit the same.
This Order shall take effect after 90 days upon signing to afford non-resident
income earners time to secure the required CORTT Form or prescribed certificate of
residency from their respective countries of residence.