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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
14 !tAR 11 P4 S8 
SEN l\,.TE 
S. B. No. ~172 
RE('EIVEU BY; 'F-
Introduced by Senator Maria Lourdes Nancy S. Binay 
AN ACT CLARlFYING THE PROCEDURE FOR APPLICATION FOR TAX TREATY 
RELIEF, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 8424, AS AMENDED, 
OTHERWISE KNOWN AS THE TAX REFORM ACT OF 1997 
EXPLANATORY NOTE 
The obligation of the State to observe in good faith its treaty obligations is integral in 
maintaining good commercial relations with other countries. 
Pacta sunt servanda thus 
requires contracting parties to comply with their treaty obligations in good faith. Rightly so, 
as this is the foundation of viable commercial relations with foreign entities. 
It would be observed that in the recent case of Deutsche Bank AG Manila Branch v. 
Commissioner of Internal Revenue (G.R. 188550, Augnst 19, 2013), the Supreme Court 
struck down a Revenue Memorandum Order ("RMO") issued by the Bureau of Internal 
Revenue ("BIR") imposing a period within which a tax treaty r61ief application may be filed . 
RMO 01-2000 provides that "any availment of the tax treaty relief must be preceded by an 
application with the International Tax Affairs Division (lTAD) at least 15 days before the 
transaction." RMO 072-2010, which amended RMO 01-2000, provides that failure to file the 
tax treaty relief application within the period prescribed shall result in disqualification. 
This proposed bill seeks to clarify the rule that unless provided under the tax treaty, 
international agreements, or other international obligations the application for treaty relief 
may be filed and processed at any time after the taxable transaction arises. 
The passage of this pill is therefore earnestly requested. 
Senator 


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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
·14 MR 11 P4:58 
SEN 1\,.TE 
S. B. No. ~172 
Introduced by Senator Maria Lourdes Nancy S. Binay 
AN ACT CLARIFYING THE PROCEDURE FOR APPLICATION FOR TAX TREATY 
RELIEF, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 8424, AS AMENDED, 
OTHERWISE KNOWN AS THE TAX REFORM ACT OF 1997 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section 32 (B) (5) of Republic Act No. 8424, as amended, is hereby further 
amended to read as follows: 
CHAPTER VI - COMPUTATION OF GROSS INCOME 
SEC. 32. Gross Income. -
xxx 
(B) Exclusions from Gross Income. - The following items shall not be included 
in gross income and shall be exempt from taxation under this title: 
xxx 
(5) Income Exempt under Treaty. - Income of any kind, to the extent 
required by any treaty obligation binding upon the Government of the 
Philippines. 
UNLESS 
PROVIDED 
OR 
SO 
REQUIRED 
UNDER 
THE 
RELEVANT TAX TREATY OR OTHER INTERNATIONAL 
OBLIGATIONS, THE APPLICATION FOR TAX TREATY RELIEF 
BY 
A 
PERSON, 
PARTNERSHIP, 
ASSOCIATION, 
CORPORATION, 
OR 
OTHER 
ENTITY, 
SUBJECT 
TO 
COMPLIANCE WITH OTHER REQUIREMENTS PRESCRIBED 
UNDER SUCH TREATY OR INTERNATIONAL OBLIGATION, 
MAY BE FILED AT ANY TIME AFTER THE TAXABLE 
TRANSACTIONS. 
SECTION 2. Repealing Clause. All laws, decrees, orders, rules and regulations, other 
issuances, or parts thereof inconsistent with the provisions of this Act are hereby repealed or 
modified accordingly. 


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SECTION 3. Effectivity. This Act shaH take effect fifteen (IS) days after its publication in at 
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least two (2) newspapers of general circulation. 
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Approved,