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DE LA SALLE UNIVERSITY

COLLEGE OF LAW

ADVANCED TAXATION LAW


Atty. Martin Ignacio D. Mijares

Course Description
This is a special tax course focusing on the taxation of international transactions and specialized
activities (export zones, investment incentives, and trans-national taxation)
Course Coverage
Taxation of resident foreign corporations under the Tax Code
International/cross border taxation
International tax planning
Special laws granting investments incentives to foreign investors and the special tax
regimes under such laws
Transfer pricing
Course Outline
PART I
I.

II.

International Taxation

What is International Taxation


A.
What is international taxation
B.
Objectives of international taxation
C. What is international tax planning
Sources of international tax law
A.
Domestic tax law
1.
Worldwide versus territorial tax systems
2.
Income taxation of foreign corporations under the Tax Code
a.
Income tax on resident foreign corporation [Section 28(A), Tax Code]
b.
Income tax on non-resident foreign corporations [Section 28 (B), Tax
Code]
3.
Income tax situs rules [Section 42, Tax Code]
4.
Concept of international double taxation
5.
Double tax relief methods
B.
Double tax conventions or tax treaties
1.
DTCs and domestic tax laws
2.
Dual role of tax treaties
3.
Philippine tax treaty network
4.
The purposes of tax treaties
5.
Structure of tax treaties
6.
Interpretation of tax treaties
a.
The Vienna Convention on the Law of Treaties
b.
OECD Model Tax Convention on Income and on Capital (OECD Model)
c.
United Nations Model Double Tax Convention Between Developed and
Developing Countries (UN Model)

7.

III.

Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc., et al., G.R.
No. 127105, June 25, 1999.
8.
Tax treaty relief
a.
Revenue Memorandum Order No. 1-2000
b.
Revenue Memorandum Order No. 72-2010
c.
Mirant (Philippines) Operations Corporation (formerly Southern Energy
Asia-Pacific Operations [Phils.]) v. Commissioner of Internal Revenue
(CIR), G.R. No. 168531, February 18, 2008.
d.
Deutche Bank AG Manila Branch v. CIR
1)
CTA En Banc (EB) No. 456, Decision dated May 29, 2009 and
Resolution dated July 1, 2009
2)
SC Decision in G.R. No. 188550, August 19, 2013
e.
CIR v. Penn Philippines, Inc., CTA EB No. 1002, CTA Case No. 7686,
February 12, 2014
Interpretation and Application of Tax Treaty Provisions
A.
Scope of the Convention
1.
Persons covered [Article 1, OECD Model]
2.
Taxes Covered [Article 2, OECD Model]
B.
Residence [Article 4, OECD Model]
1.
Function of residence concept in tax treaties
2.
Domestic law residence rules
3.
The tax treaty residence concept
4.
Tie-breaker rules
5.
Dual resident companies
C. Permanent Establishment [Article 5, OECD Model]
1.
Permanent Establishment (PE)
2.
Basic rule PE
3.
Specific PE
4.
Exclusions
5.
Construction PE
6.
Service PE
a.
Mirant (Philippines) Operations Corporation (formerly Southern Energy
Asia-Pacific Operations [Phils.]) v. CIR, supra.
7.
Agency PE
a.
BIR ITAD Ruling No. 182-00 dated December 6, 2000
b.
BIR ITAD Ruling No. 021-04 dated March 9, 2004
c.
BIR ITAD Ruling No. 106-05 dated September 21, 2005
d.
BIR ITAD Ruling No. 097-13 dated April 8, 2013
8.
Challenges to PE concept
D. Business Profits [Article 7, OECD Model]
1.
Relevance of Business Profits & Domestic Law
a.
Mirant (Philippines) Operations Corporation (formerly Southern Energy
Asia-Pacific Operations [Phils.]) v. (CIR), supra.

Atty. Martin Ignacio D. Mijares | ADVANCED TAXATION LAW

E.

F.

G.

Part II
I.

2.
Tax Treaty Law
3.
Main Rule; exception
Passive Income
1.
Active v. passive income
2.
Dividends [Article 10, OECD Model]
3.
Interest [Article 11, OECD, Model]
4.
Royalties [Article 12, OECD Model]
5.
Capital gains [Article 13, OECD Model]
6.
Concept of beneficial ownership
Elimination of Double Taxation
1.
Exemption methods [Article 23A, OECD Model]
2.
Credit methods [Article 23B, OECD Model]
3.
Mutual agreement procedure [Article 26, OECD Model Convention]
Anti-avoidance Measures
1.
Associated enterprises [Article 9, OECD Model]
2.
Exchange of information [Article 25, OECD Model]
3.
Assistance in the collection of taxes [Article 27, OECD Model]
International Tax Planning

Basic Principles of International Tax Planning


A.
International tax planning
1.
What is international tax planning
2.
The need for international tax planning
3.
Opportunities for international tax planning
4.
Role of international tax planner
B.
Tax planning and anti-avoidance measures
1.
Tax evasion vs. tax avoidance vs. tax planning
2.
General anti-avoidance rules (GAAR)
3.
Judicial anti-avoidance doctrines
a)
Business purpose rule
b)
Substance over form rule
c)
Step transaction doctrine
4.
Statutory anti-avoidance
a)
Abuse of right (Abus de droit)
b)
Abuse of law (Fraus legis)
c)
Simulation
5.
Anti-treaty shopping measures
C. International tax structures
1.
In general
2.
Examples of tax-beneficial structures
3.
Forms of business entity
4.
Financing of overseas entities
D. International offshore financial centers
1.
What is an international offshore financial center
a)
Role of offshore financial centers
b)
Should offshore financial centers be discouraged
Atty. Martin Ignacio D. Mijares | ADVANCED TAXATION LAW

2.

II.

What is a tax haven


a)
Base havens
b)
Treaty havens
E.
Intermediary entities
1.
International holding company
2.
International finance company
3.
Licensing or royalty routing company
4.
Offshore trading companies
5.
Offshore funds
6.
Offshore trusts
Some current issues and developments

Part III
I.

II.

III.

Establishment of special economic zones


A.
Major special economic zones
1.
Subic Special Economic Zone under Republic Act (RA) No. 7227
2.
Clark Special Economic Zone under RA No. 7227
3.
Philippine Economic Zone Authority under RA No. 7916, as amended by RA
No. 8748
B.
The Special Economic Zone Act of 1995
1.
The Special Economic Zones
a)
What are Ecozones
b)
Kinds of Ecozones
c)
Establishment of Ecozones
2.
Information Technology (IT) Buildings and IT Parks
a) What are IT Buildings and IT Parks
b) Registration of IT Buildings and IT Parks
3.
Registration with the PEZA
a) Activities eligible for PEZA registration
b) IT service activities registrable with PEZA
Incentives to Ecozone Enterprises
A.
Scope and limitation of entitlement to incentives
B.
Fiscal and nonfiscal incentives granted to different types of Ecozone enterprises
C.
Conditions for the availment of incentives and other privileges
Special tax regimes in the Ecozones
A.
Tax treatment of merchandise in the Ecozones
B.
Tax treatment of sales of goods, property, and services to a PEZA-registered
enterprise

PART IV
I.

II.

Philippine Special Economic Zones

TRANSFER PRICING

What is transfer pricing?


A.
Transfer pricing in general
B.
Rationale and importance of transfer pricing
C.
Effects of transfer pricing
Revised OECD Transfer Pricing Guidelines
A.
Arms length standard
B.
Transfer pricing models
C.
Administrative approaches to avoiding and resolving transfer pricing disputes
Atty. Martin Ignacio D. Mijares | ADVANCED TAXATION LAW

III.

Transfer pricing in the Philippines


A.
Statutory basis
Section 50, Tax Code
B.
Significant BIR issuances on transfer pricing
1.
Section 179, Revenue Regulations (Rev. Regs.) No. 2
2.
Revenue Audit Memorandum Order (RAMO) No. 1-95 (March 21, 1995)
3.
RAMO No. 1-98 (July 7, 1998)
4.
Revenue Memorandum Order (RMO) No. 61-98 (July 7, 1998)
5.
RMO No. 63-99 (July 17, 1999)
6.
Revenue Memorandum Circular No. 26-2008 (March 24, 2008)
7.
RMO No. 23-09 (July 8, 2009)
8.
RMO No. 036-10 (March 26, 2010)
C.
Philippine Transfer Pricing Guidelines
Rev. Regs. No. 2-2013 (January 23, 2013)
D.
Cases
Cynamid Philippines, Inc. v. CIR, CTA Case No. 4724, August 28, 1995
CIR v. Filinvest Development Corporation, G.R. No. 163653, July 19, 2011

Modes of instruction
Lectures
Recitations
Case studies
Grading Criteria
Attendance
Class participation
Mid-term examination
Final examination
Total

5%
20%
35%
40%
100%

References:
NATIONAL INTERNAL REVENUE CODE OF 1997 (TAX CODE)
OECD MODEL TAX CONVENTION ON INCOME AND ON CAPITAL (July 2010 version)
UN MODEL DOUBLE TAXATION CONVENTION (2011 Version)
Klaus Vogel, ON DOUBLE TAXATION CONVENTIONS, Third Edition, Kluwer Law
International
Roy Rohatgi, BASIC INTERNATIONAL TAXATION, Second Edition, Taxmann Publishing
International Bureau of Fiscal Documentation, FUNDAMENTALS OF INTERNATIONAL TAX
PLANNING, 2007
Brian J. Arnold and Michael J. McIntyre, INTERNATIONAL TAX PRIMER, Second Edition,
Kluwer Law International
Adrian Ogley, THE PRINCIPLES OF INTERNATIONAL TAX, Interfisc Publishing
Marissa O. Cabreros, MAXIMIZING TAX SAVINGS USING TAX TREATIES SEMINAR, Center
for Global Best Practices, March 12, 2009
OECD TRANSFER PRICING GUIDELINES FOR MULTINATIONAL ENTERPRISES AND TAX
ADMINISTRATIONS (July 2010 version)

Atty. Martin Ignacio D. Mijares | ADVANCED TAXATION LAW

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