Professional Documents
Culture Documents
Government of the United States of America with Respect to Taxes on Income was
signed in Manila on October 1, 1976. It entered into force on October 16, 1982,
the thirtieth day following the exchange of the relevant instruments of ratification in
Washington, United States on September 16, 1982. Its provisions on taxes apply on
income derived or which accrued beginning January 1, 1983.
CONVENTION
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES
AND
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of the Philippines and the Government of
the United States of America, desiring to conclude a convention for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on income,
have agreed as follows:
Article 1
TAXES COVERED
1. The taxes which are the subject of this Convention are:
a) In the case of the United States, the Federal income taxes imposed by the
Internal Revenue Code (but not including the tax on improperly accumulated
earnings or the personal holding company tax), and
b) In the case of the Philippines, the income tax imposed by Title II of the
National Internal Revenue Code (but not including the tax on improperly
accumulated earnings or the personal holding company tax).
2. This Convention shall also apply to taxes substantially similar to those covered
by paragraph 1 which are imposed in addition to, or in place of, existing taxes
after the date of signature of this Convention.
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1. In accordance with the provisions and subject to the limitations of the law of the
United States (as it may be amended from time to time without changing the
general principle hereof), the United States shall allow to a citizen or resident of
the United States as a credit against the United States tax the appropriate amount
of taxes paid or accrued to the Philippines and, in the case of a United States
corporation owning at least 10 percent of the voting stock of a Philippine
corporation from which it receives dividends in any taxable year, shall allow
credit for the appropriate amount of taxes paid or accrued to the Philippines by
the Philippine corporation paying such dividends with respect to the profits out
of which such dividends are paid. Such appropriate amount shall be based upon
the amount of tax paid or accrued to the Philippines, but the credit shall not
exceed the limitations (for the purpose of limiting the credit to the United States
tax on income from sources within the Philippines or on income from sources
outside the United States) provided by United States law for the taxable year.
For the purpose of applying the United States credit in relation to taxes paid or
accrued to the Philippines, the rules set forth in Article 4 (Source of Income)
shall be applied to determine the source of income. For purposes of applying
the United States credit in relation to taxes paid or accrued to the Philippines,
the taxes referred to in paragraphs 1(b) and 2 of Article 1 (Taxes Covered) shall
be considered to be income taxes.
2. In accordance with the provisions and subject to the limitations of the law of the
Philippines (as it may be amended from time to time without changing the
general principle hereof), the Philippines shall allow to a citizen or resident of
the Philippines as a credit against the Philippine tax the appropriate amount of
taxes paid or accrued to the United States and, in the case of a Philippine
corporation owning more than 50 percent of the voting stock of a United States
corporation from which it receives dividends in any taxable year, shall allow
credit for the appropriate amount of taxes paid or accrued to the United States by
the United States corporation paying such dividends with respect to the profits
out of which such dividends are paid. Such appropriate amount shall be based
upon the amount of tax paid or accrued to the United States, but the credit shall
not exceed the limitations (for the purpose of limiting the credit to the Philippine
tax on income from sources within the United States, and on income from
sources outside the Philippines) provided by Philippine law for the taxable year.
For the purpose of applying the Philippine credit in relation to taxes paid or
accrued to the United States, the rules set forth in Article 4 (Source of Income)
shall be applied to determine the source of income. For purposes of applying
the Philippine credit in relation to taxes paid or accrued to the United States, the
taxes referred to in paragraphs 1(a) and 2 of Article 1 (Taxes Covered) shall be
considered to be income taxes.
Article 24
NON-DISCRIMINATION
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a) As respects the rate of withholding tax, to amounts paid on or after the first
day of January immediately following the year in which this Convention
enters into force;
b) As respects other taxes, to taxable years beginning on or after January 1 of
the year following the date on which this Convention enters into force.
2. However, in the case of payments received as a consideration for the use of, or
the right to use, a copyright of cinematographic films or films or tapes used for
radio or television broadcasting, paragraph 2(b)(iii) of Article 13 (Royalties)
shall not have effect before January 1, 1979.
Article 30
TERMINATION
This Convention shall remain in force until terminated by one of the Contracting
States. Either Contracting State may terminate the Convention at any time after
5 years from the date on which this Convention enters into force provided that at
least 6 months prior notice of termination has been given through diplomatic
channels. In such event, the Convention shall cease to have force and effect as
respects income of calendar years or taxable years beginning (or, in the case of
taxes payable at the source, payments made) on or after January 1 next
following the expiration of the 6-month period.
DONE at Manila in duplicate this first day of October, 1976.
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