RMO No. 08-2017: Prescribes the procedures for claiming tax treaty  benefits for dividend, interest and royalty income of non-resident income earners

Key points

1. No more TTRA filing. The mandatory Tax Treaty Relief Application (TTRA) is no longer filed with the International Tax Affairs Division (ITAD). Withholding agents apply preferential treaty rates outright once the non-resident submits a Certificate of Residence for Tax Treaty Relief (CORTT) Form, through Withholding Final Taxes at applicable treaty rates.
2. CORTT Form and residency certificate. Non-residents may use the prescribed certificate of residency of their country of residence. They must still accomplish A, B and C of Part I of the CORTT Form, and attach the certificate if used.
3. Validity. For dividends, the CORTT Form is valid for two (2) years from issuance, but the validity date of a country certificate of residency prevails if one is used. For interest and royalties, it is valid per contract.
4. No CORTT, no relief. Without a CORTT Form, the non-resident is not claiming treaty relief and the income is subject to the normal NIRC rate. Incomplete or inaccurate information in the CORTT Form or BIR Forms 1601F and 1604-CF is a ground to deny the preferential rates and disallow the withholding agent’s expense.
5. Penalties. Violations are subject to penalties under Section 250 and other NIRC provisions. Willful failure to pay tax, file a return, keep records, give correct information, or withhold or remit taxes withheld is punishable under Sections 251 and 255.
6. Existing TTRAs. Non-residents who filed TTRAs before the Order took effect may use the treaty rates invoked, subject to compliance check. ITAD uses submitted information to build a database and asks withholding agents for any missing certificate of residency.

Who is affected

• Non-resident income earners with dividend, interest and royalty income
• Withholding agents and income payors

Deadlines and effectivity

• Takes effect 90 days after signing
• CORTT Form for dividends: valid for two (2) years from date of issuance