Clarifying the procedures and guidelines for availing tax treaty benefits

IN an effort to rationalize the procedures and requirements for the availment of tax treaty benefits, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) 14-2021 prescribing for updated procedures on availing tax treaty benefits for non-resident foreign income earners.

To recall, RMO 14-2021 provides that taxpayers who intend to avail of the preferred tax rates pursuant to a tax treaty must observe the following procedures: the withholding agent shall apply the preferred tax rates pursuant to a tax treaty upon the payment of withholding tax when it becomes due and demandable; a request for confirmation on the propriety of the withholding tax rates applied on that item of income must be filed with the International Tax Affairs Division of the BIR at any time after the payment of withholding tax but in no case be later than the last day of the fourth month following the close of each taxable year; and the BIR shall either deny or confirm the withholding tax rate applied by the withholding agent. If the BIR affirms the rate used by the withholding agent, a certificate confirming the entitlement to tax treaty benefits will be issued.