Australian Tax Treaties
Philippine Agreement
AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
CHAPTER IV
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METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 24
(1)
Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Philippine tax paid, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in the Philippines (excluding, in the case of dividends, tax paid in respect of the profits out of which the dividends are paid except to the extent that the provisions of paragraph (2) may permit that tax to be included) shall be allowed as a credit against Australian tax payable in respect of that income.
(2)
A company which is a resident of Australia is, in accordance with the provisions of the taxation law of Australia in force at the date of signature of this Agreement, entitled to a rebate in its assessment at the average rate of tax payable by the company in respect of dividends that are included in its taxable income and are received from a company that is a resident of the Philippines. However, should the law so in force be amended so that the rebate in relation to the dividends ceases to be allowable under that law, credit shall be allowed to the first-mentioned company under paragraph (1) for the Philippine tax paid on the profits out of which the dividends are paid, but only if that company beneficially owns at least 10 per cent of the paid-up share capital of the second-mentioned company.
(3)
For the purposes of paragraph (1) and of the income tax law of Australia -
(a) a resident of Australia deriving income from sources in the Philippines, consisting of royalties to which sub-paragraph (a) of paragraph (2) of Article 12 applies, shall be deemed to have paid, in addition to any Philippine tax actually paid, Philippine tax in an amount equal to 5% of the gross amount of the royalties; and
(b) the amount of the said royalties shall be deemed to be the amount that would have been the amount of the royalties if no Philippine tax had been paid, increased by 5%.
(4)
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 resident of the Philippines as a credit against the Philippine tax the appropriate amount of taxes paid or accrued to Australia. In the case of a Philippine corporation owning more than 50 per cent of the voting stock of an Australian corporation from which it receives dividends in any taxable year, the Philippines shall also allow credit for the appropriate amount of taxes paid or accrued to Australia by an Australian 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 Australia, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the Philippine tax on income from sources within Australia, and on income from sources outside the Philippines) provided by Philippine law for the taxable year.
Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Philippine tax paid, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in the Philippines (excluding, in the case of dividends, tax paid in respect of the profits out of which the dividends are paid except to the extent that the provisions of paragraph (2) may permit that tax to be included) shall be allowed as a credit against Australian tax payable in respect of that income.
(2)
A company which is a resident of Australia is, in accordance with the provisions of the taxation law of Australia in force at the date of signature of this Agreement, entitled to a rebate in its assessment at the average rate of tax payable by the company in respect of dividends that are included in its taxable income and are received from a company that is a resident of the Philippines. However, should the law so in force be amended so that the rebate in relation to the dividends ceases to be allowable under that law, credit shall be allowed to the first-mentioned company under paragraph (1) for the Philippine tax paid on the profits out of which the dividends are paid, but only if that company beneficially owns at least 10 per cent of the paid-up share capital of the second-mentioned company.
(3)
For the purposes of paragraph (1) and of the income tax law of Australia -
(a) a resident of Australia deriving income from sources in the Philippines, consisting of royalties to which sub-paragraph (a) of paragraph (2) of Article 12 applies, shall be deemed to have paid, in addition to any Philippine tax actually paid, Philippine tax in an amount equal to 5% of the gross amount of the royalties; and
(b) the amount of the said royalties shall be deemed to be the amount that would have been the amount of the royalties if no Philippine tax had been paid, increased by 5%.
(4)
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 resident of the Philippines as a credit against the Philippine tax the appropriate amount of taxes paid or accrued to Australia. In the case of a Philippine corporation owning more than 50 per cent of the voting stock of an Australian corporation from which it receives dividends in any taxable year, the Philippines shall also allow credit for the appropriate amount of taxes paid or accrued to Australia by an Australian 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 Australia, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the Philippine tax on income from sources within Australia, and on income from sources outside the Philippines) provided by Philippine law for the taxable year.
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