The governments of Philippines and Thailand signed a new Income Tax Treaty on 21 June 2013.
After completing necessary ratification procedures by both countries the treaty will enter into force. After entering into force and becoming effective, the new treaty will replace the existing treaty concluded in 1982.
According to the treaty provisions the residence status of a corporation would be determined by its place of incorporation or by its place of management. The definition of permanent establishment would include a building site, construction, installation or assembly project or supervisory activities with a period of more than three months. The service PE would also be included in the definition.
In the case of dividends paid to a beneficial owner that is a company (excluding partnerships) which holds directly at least 25 percent of the capital of the paying company, a maximum tax rate of 10% will apply in the source country and in other cases a 15% tax rate will apply on the dividends. A maximum 10% branch profits remittance tax will also be applied.
A 10% tax rate on interest will apply if interest is received by any financial institution (including an insurance company), and 15% in all other cases.
In all cases a maximum 15% tax rate will be applied on royalties.
