Tax Notes: Protocol Amending RP – New Zealand Tax Treaty

THE Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Circular (RMC) No. 32-2016 setting the amendments in the provisions of the Philippines-New Zealand tax treaty, which was originally entered into on Oct. 2, 2008.

The Protocol includes the following changes:

1. The rate for dividends was changed to a unified rate of 15 percent of the gross amount of dividends from the previous 15 percent and 25 percent;

2. The rate for interest was changed to 10 percent of the gross amount of interest reduced from 15 percent;

3. The rate for royalties was changed to a unified rate of 15 percent of the gross amount of the royalties in lieu of the previous 15 percent and 25 percent;

4. The term “royalties” has been expanded covering the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right, equipment, or knowledge or information as mentioned in sub-paragraphs (a) to (c) of the Protocol; and

5. An additional paragraph was inserted in Article 9 (Associated Enterprises) providing for appropriate adjustment to the amount of the tax charged on profits in case of transfer pricing adjustments in one jurisdiction.

The provisions of the Protocol shall have effect in respect of taxes covered by the said Protocol, including taxes withheld at source, for any taxable period beginning on or after first day of January 2009.

Please be reminded that the New Zealand resident income earner or an authorized representative thereof should file a duly accomplished BIR Form No. 0901 (Application for Relief from Double Taxation) together with the required documents. In addition, Tax Treaty Relief Applications (TTRA) should be filed with and addressed to the International Tax Affairs Division (ITAD).
For further information, please refer to the full text of the Protocol Amending the Philippines-New Zealand Tax Treaty.