(Revenue Memorandum Circular No. 77-2021 issued on June 15, 2021)
This Tax Alert is issued to remind all concerned taxpayers on the requirement for availing tax treaty benefits as provided under Revenue Memorandum Order (RMO) No. 14-2021 and Revenue Memorandum Circular No. 77-2021.
Under RMO No. 14-2021, a request for confirmation (RFC) or tax treaty relief application shall apply to all income derived by nonresidents from Philippine sources that may be entitled to relief from double taxation under relevant tax treaties. The submission of Certificate of Residence for Treaty Relief (CORTT) Form for dividends, interest and royalties shall be discontinued.
Nonresident who has income in 2020 and prior years subjected to treaty rates, but no TTRA or Certificate of Residence for Tax Treaty Relief (CORTT) Form was filed therefore, the withholding agent has until the last working day of this year (December 29, 2021) to file an RFC with complete documentary requirements. Failure to file the same within the prescribed deadline would be subject to administrative penalties under Sections 250 and 255 of the Tax Code. Moreover, a penalty of P1,000 per failure to file a CORTT Form for dividends, interests and royalties paid after the effectivity of RMO No. 8-2017 until December 31, 2020 shall be imposed.
If the RFC or TTRA is approved, the BIR will issue a Certificate of Entitlement (COE) instead of the usual BIR Ruling. The COE will still contain the material facts of the case and a ruling confirming the nonresident's entitlement to treaty benefit.
Applications with incomplete documents will not be accepted by ITAD.
In meritorious cases, the nonresident or withholding agent may be granted an extension within which to submit the required documents but in no case shall it exceed thirty (30) day.