PROCEDURES FOR PROCESSING TAX TREATY RELIEF APPLICATION

This Order is issued to streamline the processing of the tax treaty
relief application in order to improve efficiency and service to the
taxpayers.

Furthermore, it is to the best interest of both the taxpayer and the
Bureau of Internal Revenue that any availment of the tax treaty
provisions be preceded by an application for treaty relief with the
International Tax Affairs Division (ITAD). In this way, the consequences
of any erroneous interpretation and/or application of the treaty
provisions (i.e., claim for tax refund/credit for overpayment of taxes,
or deficiency tax liabilities for underpayment) can be averted before
proceeding with the transaction and or paying the tax liability covered
by the tax treaty.

II.         Coverage:

This Order covers exclusively applications for tax treaty relief,
including claims or requests for tax exemption, preferential tax treaty
rate, refund or credit of taxes on the following income derived or to be
derived by the taxpayer under existing tax treaties, to wit:

III.        Policies:

In order to achieve the above-mentioned objectives, the following policies shall be observed:

1.  The processing for tax treaty relief shall be transferred from
Law Division to the International Tax Affairs Division (ITAD) in
accordance with the approved memorandum dated March 23, 1999.

2.  Any availment of the tax treaty relief shall be preceded by an
application by filing BIR Form No. 0901 (Application for Relief from
Double Taxation) with ITAD at least 15 days before the transaction i.e.
payment of dividends, royalties, etc., accompanied by supporting
documents justifying the relief. Consequently, BIR Form Nos. TC 001 and
TC 002 prescribed under RMO 10-92 are hereby declared obsolete.

3.  Claims for tax credit/refund pertinent to the tax treaty relief
requested filed with ITAD within the two (2) year period prescribed by
Section 229 of the NIRC, as amended under RA 8424. The Tax Credit
Certificate for this purpose shall be issued for the account of the
“non-resident taxpayer/recipient of the income”.

IV.       Procedures:

The following procedures are to be observed in the processing of the tax treaty relief application:

1.  Taxpayer

1.1    Accomplish the new BIR Form 0901 – Application for Relief from Double Taxation.

1.2    File BIR Form 0901 with ITAD at least 15 days before the
transaction i.e. payment of dividends, royalties, etc., with all the
supporting documents justifying the relief sought.

1.3    Attach to the Withholding Tax Return Form 1743W/new
computerized BIR Form 1601 (covering the final withholding taxes based
on the preferential tax treaty rate for income payments to
non-residents), a copy of the accomplished BIR Form 0901 duly
acknowledged/received by ITAD, or when available, the approved ruling as
proof of the availment of the preferential tax treaty treatment.

2.      ITAD

2.1    Check completeness and validity of documents submitted.

2.2    Review the application and/or determine whether the applicant
is entitled to the tax relief or tax refund/credit requested.

2.3    In case of claims for tax credit/refund, verify with the
Revenue Accounting Division the remittance of applicable taxes, and with
the Collection Division of the respective Revenue Region for any
outstanding tax liabilities of the concerned taxpayer.

2.4    Prepare the necessary documents such as ruling, letter,
memorandum, disbursement vouchers if applicable, for approval by the
Commissioner or his duly authorized representative.

2.5    In the case of tax refund, indorse the Disbursement Voucher
and the certified copy of the ruling, both approved by the Commissioner,
to the Chief of the Accounting Division for the payment/processing of
tax refund. (The payee/claimant in the Disbursement Voucher shall be in
the name of the non-resident taxpayer/recipient of the income.)

2.6    In the case of tax credit, forward to the Appellate Division
the indorsement memo together with the certified copy of the approved
ruling for the issuance of a tax credit certificate.

2.7    Release to the taxpayer concerned the original copy of the
approved ruling and/or duly signed tax credit certificate immediately
upon receipt thereof.

2.8    Notify the competent authorities of the countries of
residence of taxpayers availing of the tax treaty provisions, if
necessary.

3.      Appellate Division

3.1    Issue the tax credit certificate upon receipt of indorsement
memo from ITAD recommending the issuance of such. The tax credit
certificate shall be issued in the name of the withholding agent for the
account of the “non-resident taxpayer/recipient of the income”.

3.2    Forward the duly signed Tax Credit Certificate to ITAD for release to the taxpayer/applicant concerned.

4.      All audit offices and units in the National Office, Regional Offices and the District Offices

4.1    Notify ITAD of any tax treaty relief availment by taxpayers
not covered by any application/approval within fifteen (15) days from
discovery, by forwarding a report of tax treaty relief availment.
(Please refer to Annex C for the report format.)

V.        Repealing Clause:

This Order revokes RMO No. 10-92 dated February 01, 1992 and amends
all other issuances and portions thereof inconsistent herewith.

VI.       Effectivity:

This Order takes effect immediately.

Adopted: 25 Nov. 1999

(SGD.) BEETHOVEN L. RUALO
Commissioner of Internal Revenue