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BIR Prescribes Guidelines and Procedures for the Spontaneous Exchange of Taxpayer Specific Rulings

The Bureau of Internal Revenue (“BIR”) issued Revenue Regulations No. 11-2022, which provided the guidelines and procedures for the spontaneous exchange of taxpayer specific rulings.

The immediate availability of relevant information on taxpayer-specific rulings is an important consideration to provide tax administrations with access to timely information regarding rulings that have been granted to a foreign related party or permanent establishment of a resident taxpayer, which may be used to conduct risk assessments. This is made possible through spontaneous exchange of rulings which are made pursuant to international exchange of information agreements like Double Taxation Agreements (“DTAs”), Tax Information Exchange Agreements or the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. 

In the Philippines, the tax authorities are mandated to exchange such information by the exchange of information provisions found in DTAs. The International Tax Affairs Division of the BIR, through its Exchange of Information (“EOI”) Section shall oversee the exchange of taxpayer specific rulings to the foreign tax authorities. 

Information subject to exchange and the potential exchange jurisdictions for each are as follows:

Type of Ruling

Potential Exchange Jurisdictions

Rulings related to certain preferential regimes

a. The countries of residence of all related parties, with which the taxpayer enters into a transaction for which a preferential treatment is granted or which gives rise to income from related parties benefiting from a preferential treatment.
b. The residence country of (i) the ultimate parent company, and (ii) the immediate parent company.

Unilateral advance pricing arrangements (“APAs”) or other cross-border unilateral rulings in respect of transfer pricing

a. The countries of residence of all related parties with whom the taxpayer enters into transactions that are covered by the APA or cross-border unilateral tax ruling.
b. The residence country of (i) the ultimate parent company, and (b) the immediate parent company.

Rulings providing for a downward adjustment of taxable profits

a. The countries of residence of all related parties with whom the taxpayer enters into transactions covered by the ruling.
b. The residence country of (i) the ultimate parent company, and (b) the immediate parent company.

Permanent establishment (“PE”) rulings

a. The residence country of the head office, or the country of the PE, as the case may be.
b. The residence country of (i) the ultimate parent company, and (b) the immediate parent company.

Related party conduit rulings

a. The country of residence of any related party making payments to the conduit (direct or indirectly).
b. The country of residence of the ultimate beneficial owner of payments made to the conduit.
c. The extent not already covered by the residence country of (i) the ultimate parent company, and (b) the immediate parent company.

The rulings may be exchanged via: (i) registered mail, or (ii) encrypted electronic mail. The EOI Section shall ensure that information to be exchanged shall be transmitted in a timely manner, according to the following timelines:

  1. For past rulings – as soon as possible after identifying the potential exchange jurisdictions; and
  2. For future rulings – as soon as possible and no later than three (3) months after the issuance thereof.

Past rulings include PE rulings or rulings concerning the existence or absence of a PE of a foreign enterprise in the Philippines issued either: (i) on or before 1 January 2015 but before 1 September 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as of 1 January 2015. Meanwhile, future rulings are rulings issued past such periods.

The EOI Section is also mandated to provide a status update regarding the request within ninety (90) days after receipt of such request.