Tax Alert

(Revenue Memorandum Order (RMO) No. 43-2020 issued on December 01, 2020)

This Tax Alert is issued to inform all concerned on the streamlined procedures in the issuance of Tax Residency Certificate (TRC) by the Bureau of Internal Revenue (BIR) and other clarifications regarding the requirement of securing TRC by concerned taxpayers.

Pursuant to the Ease of Doing Business Law, the following revised guidelines and procedures were prescribed by the BIR for the issuance of TRC:

1. Instead of a letter-request, a duly accomplished BIR Form No. 0902 shall be submitted by an applicant, together with the supporting documents based on the revised list of documentary requirements (see full text of the RMO for the list of documentary requirements).
2. The assigned case officer shall inform the applicant of any deficiency in the accompanying requirements within three (3) working days either though registered mail or electronic mail (e-mail).
3. All TRC applications shall be acted upon within fourteen (14) working days from the submission of complete documentary requirements.

The BIR also reiterated that ITAD shall act as repository of information related to foreign-sourced income of Philippine taxpayers and shall furnish the relevant information regarding such foreign-sourced income to the appropriate RDO or LTD for verification whether or not the foreign-sourced income was properly declared and the corresponding tax was paid by the income earner.

Moreover, the BIR clarified that taxpayers who fail to secure a TRC shall not be allowed to claim foreign tax credits in excess of the appropriate amount of tax that is supposed to be paid in the source state had the income recipient invoked the provision/s of the treaty and proved his/her/its residency in the Philippines.