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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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DT: Philippines: double taxation agreement, Article 21: Elimination of double taxation

 

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle here of):

 

  1. Philippine tax payable under the law of the Philippines and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within the Philippines (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Philippine tax is computed.
  2. In the case of a dividend paid by a company which is a resident of the Philippines to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Philippine tax creditable under the provisions of subparagraph (a) of this paragraph) the Philippine tax payable by the company in respect of the profits out of which such dividend is paid.

(2) Subject to the provisions of the laws of the Philippines relating to the allowanceas a credit against Philippine tax of tax paid in a territory outside the Philippines,United Kingdom tax payable under the laws of the United Kingdom and in accordance withthis Convention, whether directly or by deduction, in respect of income from sources within the United Kingdom shall be allowed, where similar tax is imposed in the Philippines, as a credit against Philippine tax payable in respect of that income. The deduction shall not, however, exceed that part of the Philippine income tax, as computed before the deduction is given, which is appropriate to the income which may be taxed inthe United Kingdom.

(3) For purposes of paragraphs (1) and (2) of this Article profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other Contracting State.