Philippines Tax Agency Clarifies Tax Residency Certificate Requirements for Foreign Tax Credits

The Philippine Bureau of Internal Revenue Dec. 1 issued Order No. 43-2020, clarifying tax residency certificate (TRC) requirements to claim foreign tax credits for individuals and corporations to prevent treaty abuse. The order includes: 1) an overview of foreign tax credits under DTAs; 2) the requirement for Philippine taxpayers with foreign-sourced income to obtain TRCs; 3) the imposition of the regular tax rate in the source country, if taxpayers don’t establish proof of residency; 4) tax credits equal to the amount of taxes that taxpayers would pay in the source country under treaty provisions; 5) application, documentation, and procedural requirements; ...