Scribd Logo
Upload

Welcome to Scribd!

  • 4K views

    Deutsche Bank Ag Manila Branch vs. Cir

    Uploaded by

    Salma Gurar
    The Supreme Court ruled that the failure to strictly comply with Revenue Memorandum Order No. 1-2000 will not deprive corporations of the benefits of a tax treaty. Specifically: 1) Deutsche Bank AG Manila Branch paid branch profit remittance tax at 15% but later claimed they were entitled to the preferential 10% rate under the Philippines-Germany tax treaty. 2) The Court of Tax Appeals denied their claim for a refund because they did not apply for tax treaty relief within 15 days as required by RMO No. 1-2000. 3) The Supreme Court overturned this, finding that depriving taxpayers of tax treaty benefits due to non-compliance with an administrative issuance would violate international law

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Deutsche Bank Ag Manila Branch vs. Cir

    Uploaded by

    Salma Gurar
    4K views2 pages
    The Supreme Court ruled that the failure to strictly comply with Revenue Memorandum Order No. 1-2000 will not deprive corporations of the benefits of a tax treaty. Specifically: 1) Deutsche Bank AG Manila Branch paid branch profit remittance tax at 15% but later claimed they were entitled to the preferential 10% rate under the Philippines-Germany tax treaty. 2) The Court of Tax Appeals denied their claim for a refund because they did not apply for tax treaty relief within 15 days as required by RMO No. 1-2000. 3) The Supreme Court overturned this, finding that depriving taxpayers of tax treaty benefits due to non-compliance with an administrative issuance would violate international law

    Original Description:

    tax law case

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Supreme Court ruled that the failure to strictly comply with Revenue Memorandum Order No. 1-2000 will not deprive corporations of the benefits of a tax treaty. Specifically: 1) Deutsche Bank AG Manila Branch paid branch profit remittance tax at 15% but later claimed they were entitled to the preferential 10% rate under the Philippines-Germany tax treaty. 2) The Court of Tax Appeals denied their claim for a refund because they did not apply for tax treaty relief within 15 days as required by RMO No. 1-2000. 3) The Supreme Court overturned this, finding that depriving taxpayers of tax treaty benefits due to non-compliance with an administrative issuance would violate international law

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    4K views2 pages

    Deutsche Bank Ag Manila Branch vs. Cir

    Uploaded by

    Salma Gurar
    The Supreme Court ruled that the failure to strictly comply with Revenue Memorandum Order No. 1-2000 will not deprive corporations of the benefits of a tax treaty. Specifically: 1) Deutsche Bank AG Manila Branch paid branch profit remittance tax at 15% but later claimed they were entitled to the preferential 10% rate under the Philippines-Germany tax treaty. 2) The Court of Tax Appeals denied their claim for a refund because they did not apply for tax treaty relief within 15 days as required by RMO No. 1-2000. 3) The Supreme Court overturned this, finding that depriving taxpayers of tax treaty benefits due to non-compliance with an administrative issuance would violate international law

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    G.R. No.

    188550, August 19, 2013

    DEUTSCHE BANK AG MANILA BRANCH, vs. CIR

    Facts: petitioner withheld and remitted to BIR 15% branch profit remittance tax (BPRT) on its
    regular banking unit (RBU) net income to Deutsche Bank Germany (DB Germany) for 2002 and
    prior taxable years.Believing that it made an overpayment of the BPRT, petitioner filed an
    administrative claim for refund or issuance of its tax credit. On the same date, It requested from
    the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential
    tax rate of 10% under the RP-Germany tax treaty.Alleging the inaction of the BIR on its
    administrative claim, petitioner filed a Petition for Review with the CTA. On the second CTA
    division the claim of petitioner for a refund was denied on the ground that the application for a
    tax treaty relief was not filed with ITAD prior to the payment by the former of its BPRT and actual
    remittance of its branch profits to DB Germany, or prior to its availment of the preferential rate of
    ten percent (10%) under the RP-Germany Tax Treaty provision. The court a quo held that
    petitioner violated the fifteen (15) day period mandated under Section III paragraph (2) of
    Revenue Memorandum Order (RMO) No. 1-2000.The CTA En Banc affirmed the CTA Second
    Divisions Decision

    Issue:whether the failure to strictly comply with RMO No. 1-2000 will deprive persons or
    corporations of the benefit of a tax treaty.

    Ruling:

    No. Under Section 28(A)(5) of the NIRC, any profit remitted to its head office shall be subject to a
    tax of 15% based on the total profits applied for or earmarked for remittance without any
    deduction of the tax component. By virtue of the RP-Germany Tax Treaty, we are bound to
    extend to a branch in the Philippines, remitting to its head office in Germany, the benefit of a
    preferential rate equivalent to 10% BPRT. Constitution provides for adherence to the general
    principles of international law as part of the law of the land. The time-honored international
    principle of pacta sunt servanda demands the performance in good faith of treaty obligations on
    the part of the states that enter into the agreement. Every treaty in force is binding upon the
    parties, and obligations under the treaty must be performed by them in good faith. More
    importantly, treaties have the force and effect of law in this jurisdiction. Tax treaties are entered
    into to reconcile the national fiscal legislations of the contracting parties and, in turn, help the
    taxpayer avoid simultaneous taxations in two different jurisdictions.

    Bearing in mind the rationale of tax treaties, the period of application for the availment of tax
    treaty relief as required by RMO No. 1-2000 should not operate to divest entitlement to the relief
    as it would constitute a violation of the duty required by good faith in complying with a tax treaty.
    The denial of the availment of tax relief for the failure of a taxpayer to apply within the
    prescribed period under the administrative issuance would impair the value of the tax treaty. At
    most, the application for a tax treaty relief from the BIR should merely operate to confirm the
    entitlement of the taxpayer to the relief.

    The obligation to comply with a tax treaty must take precedence over the objective of RMO No.
    1-2000. Logically, noncompliance with tax treaties has negative implications on international
    relations, and unduly discourages foreign investors. While the consequences sought to be
    prevented by RMO No. 1-2000 involve an administrative procedure, these may be remedied
    through other system management processes, but we cannot totally deprive those who are
    entitled to the benefit of a treaty for failure to strictly comply with an administrative issuance
    requiring prior application for tax treaty relief.

    You might also like