RMO No. 14-2021: Streamlines the procedures and documents for the availment of Treaty Benefits

Key points

1. Documents relied on. Withholding agents may rely on BIR Form No. 0901, the Tax Residency Certificate (TRC) from the foreign tax authority, and the applicable treaty provision to apply a reduced rate or exemption. Non-residents submit these to each withholding agent before the first payment of income, otherwise the regular Tax Code rates apply instead of the treaty rate.
2. Request for confirmation or TTRA. If the treaty rate was applied, the withholding agent files a request for confirmation with the International Tax Affairs Division (ITAD), no later than the last day of the fourth (4th) month after each taxable year ends. If regular rates were applied, the non-resident files a Tax Treaty Relief Application (TTRA) with ITAD at any time after receiving the income.
3. Outcome. If the rate applied was lower than the treaty rate or the taxpayer is not entitled, a BIR Ruling denies the request and the withholding agent pays deficiency tax plus penalties. If the rate was proper or higher, a certificate confirms entitlement and the taxpayer may apply for refund of excess tax. Certification is signed by the Assistant Commissioner for Legal Service, while denials and first-impression cases get a BIR Ruling signed by the Commissioner or an authorized representative.
4. Long-term contracts and timing. One TTRA or request is generally filed per transaction. For contracts effective for more than a year, an updated form, a new TRC if the old one lapsed, and other documents are filed by the last day of the 4th month after each taxable year. New TTRAs are processed within four (4) months from complete documents, or as soon as practicable once ITAD addresses its backlogs.
5. Refund, appeal and pending cases. Refund claims under Form No. 1913 are filed within the two-year period under Section 229 of the Tax Code, and adverse rulings are appealable to the Department of Finance within thirty (30) days. Pending TTRAs for 2020 and prior years have three (3) months from a Final Notice or the Order’s effectivity, whichever is later, to submit lacking documents, or they are automatically denied.
6. Other rules. Foreign documents are authenticated by the Philippine Embassy or apostilled. Violations are subject to penalties under Sections 250 and 255 of the Tax Code, and false information may lead to perjury charges under Article 183 of the Revised Penal Code. Submission of the Certificate of Residence for Treaty Relief (CORTT) Form is discontinued for dividends, interest and royalties.

Who is affected

• Non-resident taxpayers with Philippine-source income
• Withholding agents and income payors
• Taxpayers with pending TTRAs for 2020 and prior years

Deadlines and effectivity

• Request for confirmation: no later than last day of the 4th month after the taxable year
• New TTRAs processed within four (4) months from complete documents
• Adverse rulings appealable within thirty (30) days
• Pending TTRAs: three (3) months to submit lacking documents