PREVIOUSLY, the availment of tax treaty benefits for dividend, interest and royalty income of non-residents requires the filing of a tax treaty relief application (TTRA) with BIR.
Under Revenue Memorandum Circular (RMO) No. 8-2017, the mandatory TTRAs are no longer filed. The non-resident claiming tax treaty benefits must submit to the withholding agent the certificate of residence for tax treaty relief (CORTT) form in lieu of the TTRA.
The preferential treaty rates for dividends, interests and royalties may be applied outright by the withholding agents upon receipt of the CORTT form.
Failure to submit a CORTT form to the withholding agent would mean that the non-resident is not claiming any tax treaty relief and therefore such income is subject to the normal tax rates under the Tax Code.
For dividend income purpose, the CORTT form is valid for two years from the date of issuance. For interest and royalty income purposes, the CORTT form is valid per contract.
For non-residents who have filed TTRA prior to this RMO, they are allowed to use the tax treaty rates invoked, subject to a compliance check.
Other income payments such as business profits and capital gains are not included under this RMO.
Please see the RMO for more information on the accomplishment of the CORTT form and other relate d procedures.
Source: P&A Grant Thornton