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BIR Ruling No.127-98 PDF
BIR Ruling No.127-98 PDF
000-00-127-98
Gentlemen :
This refers to your letter dated June 10, 1998 requesting on behalf of your
clients, Banker's Trust Company Singapore (BTCS) and Bankers Trust
International Asia Ltd. (BTIA), for a ruling that the interest income of BTCS and
BTIA, both non-resident foreign corporations, from peso placements or deposits in
the Philippines is subject to the preferential tax rate of 15% withholding tax
pursuant to Article 11(2) of the RP-Singapore Tax Treaty, as implemented by
Revenue Regulations No. 7-82. LLpr
In reply, please be informed that Article 11(2) and (3) of the RP-Singapore
Tax Treaty provide, viz:
"Article 11
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"Interest
"(1) . . .
"(3) The term "interest" as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage, and whether
or not carrying a right to participate in the debtor's profits, and in particular,
income from government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities, bonds or
debentures, as well as income assimilated to income from money lent by the
taxation law of the State in which the income arises, including interest on
deferred payment sales. Penalty charges for late payment shall not be
regarded as interest for purposes of this Article. llcd
"(1) . . .
considering that the interest income derived by BTCS and BTIA in the Philippines
does not arise from (a) and (b) of Section 13(2) of Revenue Regulations No. 7-82,
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implementing the RP-Singapore Tax Treaty and considering further that peso
placement partakes the nature of an ordinary deposit, its interest income derived
from the peso placements in the Philippines by BTCS and BTIA are subject to the
preferential tax rate of 15% withholding tax imposed under Section 13(2)(c) of
Revenue Regulations No. 7-82.
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