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BIR Ruling 383-15 - Dividends Received by Luxembourg Entity (Participation Exemption)
BIR Ruling 383-15 - Dividends Received by Luxembourg Entity (Participation Exemption)
Gentlemen :
This refers to your letter dated April 26, 2013 requesting confirmation of your
opinion that the cash dividends paid by your client, Samsonite Philippines, Inc.
("Samsonite") to Delilah Europe Investments S.a.r.l. ("LuxCo") in 2011 and 2012 is
subject to final withholding tax ("FWT") at the rate of fifteen percent (15%) pursuant
to Section 28 (B) (5) (b) of the Tax Code of 1997, as amended.
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address at 20, Avenue Monterey, L-2163, Luxembourg; that LuxCo is the registered
owner of Thirty Six Million Nine Hundred Fifty Nine Thousand Nine Hundred Ninety
Seven (36,959,997) shares of Samsonite representing sixty percent (60%) of
Samsonite's total outstanding stock which it directly and continuously holds since
2010; that Samsonite's Board of Directors declared cash dividends on the following
dates:
that the aforesaid dividend declarations are not under investigation, on-going audit,
administrative protest, claim for refund or issuance of a tax credit certificate,
collection proceedings, or a judicial appeal of Samsonite or LuxCo.; and that in
support of this request the following documents were submitted:
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6) Copy of the BIR Certificate of Registration of Samsonite.
In reply, please be informed that Section 28 (B) (5) (b) of the Tax Code of
1997, as amended, provides that —
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(G.R. No. L-68375 dated April 15, 1988) the Supreme Court ruled that —
"In the instant case, Switzerland did not impose any tax on the dividends
received by Glaro. Accordingly, Wander claims that full credit is granted and
not merely credit equivalent to 20%. Petitioner, on the other hand, avers the tax
sparing credit is applicable only if the country of the parent corporation allows a
foreign tax credit not only for the 15 percentage-point portion actually paid but
also for the equivalent twenty percentage-point portion spared, waived or
otherwise deemed as if paid in the Philippines; that private respondent does not
cite anywhere a Swiss law to the effect that in case where a foreign tax, such as
the Philippine 35% dividend tax, is spared, waived or otherwise considered as if
paid in whole or in part by the foreign country, a Swiss foreign-tax credit would
be allowed for the whole or for the part, as the case may be, of the foreign tax so
spared or waived or considered as if paid by the foreign country.
"Considering that:
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Luxembourg;
IN VIEW OF THE FOREGOING, this Office holds that the portion of cash
dividends declared by Samsonite on May 11, 2011 and May 7, 2012 to be received by
LuxCo on or before the respective pay out dates — May 31, 2011 and June 8, 2012,
are subject to the 15% final withholding tax as prescribed under Section 28 (B) (5) (b)
of the Tax Code of 1997, as amended.
This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then
this ruling shall be considered null and void.
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