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BIR Provides Guidelines on the Filing of Requests for Confirmation, Tax Treaty Relief Applications and Tax Sparing Applications

On 17 February 2022, the Bureau of Internal Revenue (“BIR”) issued Revenue Memorandum Circular No. 20- 2022 (the “Circular”) with the aim to limit the number of requests for confirmation (“RFCs”) and tax treaty relief application (“TTRAs”) filed with International Tax Affairs Division (“ITAD”). This Circular has been issued to clarify that taxpayers who were already issued with Certificate of Entitlement (“COEs”) shall no longer file RFC, TTRA or tax sparring application every time an income of similar nature is paid to the same nonresident. In applying the confirmed treaty benefit to future income payments, the income payor or withholding agent shall always be guided by the requisites mentioned in the COE.  The same aforementioned rules shall also apply to the COE to the Reduced Dividend Rate issued by the BIR for tax sparing applications.

During a tax audit, it shall be incumbent upon the taxpayer to present a copy of the COE and proof that all the requisites cited therein have been satisfied. In case of doubt, the tax auditor may confirm the same to the ITAD.

For long-term contract of services that requires annual updating, the taxpayer is only required to submit the following documents:

  1. TRC of the nonresident for the relevant year 
  2.  Sworn Certification which states:
    1. The services provided by the foreign enterprise;
    2. The place of performance of such services;
    3. The individuals who rendered the services on behalf of the foreign enterprise, their positions/designations and professional background; and
    4. The duration of stay in the Philippines of said individuals
  3. Certified true copy of their passports or a Certification duly issued by the Bureau of Immigration, stating their dates of arrival in and departure from the Philippines;
  4. Certificate of Completion of the project duly signed by the income recipient and duly accepted by the domestic income payor, if applicable;
  5. Invoice(s) duly issued by the income recipient in accordance with the invoicing requirements of the country of residence, if applicable; and 
  6. Bank documents/certificate of deposit/telegraphic transfer/telex/money transfer evidencing the payment remittance of income, if applicable.