BANK OF AMERICA NT & SA VS. CA- Remittance Tax

Category: Income Taxation

In the 15% remittance tax, the law specifies its own tax base to be on the “profit remitted abroad.” There is absolutely nothing equivocal or uncertain about the language of the provision. The tax is imposed on the amount sent abroad, and the law calls for nothing further.

FACTS:

1. Bank of America is a foreign corporation licensed to engage in business in the Philippines through a branch in Makati.
2. Bank of America paid 15% branch profit remittance tax amounting to PhP7.5M from its REGULAR UNIT OPERATIONS and another 405K PhP from its FOREIGN CURRENCY DEPOSIT OPERATIONS
3. The tax was based on net profits after income tax without deducting the amount corresponding to the 15% tax.
4. Bank of America thereafter filed a claim for refund with the BIR for the portion the corresponds with the 15% branch profit remittance tax. BOA’s claim: “BIR should tax us based on the profits actually remitted (45M), and NOT on the amount before profit remittance tax (53M)... The basis should be the amount actually remitted abroad.”
5. CIR contends otherwise and holds that in computing the 15% remittance tax, the tax should be inclusive of the sum deemed remitted.

ISSUES: Whether or not the branch profit remittance tax should be base on the amount actually remitted?

HELD: YES.

1. It should be based on the amount actually committed, NOT what was applied for.
2. There is nothing in Section 24which indicates that the 15% tax/branch profit remittance is on the total amount of profit; where the law does NOT qualify that the tax is imposed and collected at source, the qualification should not be read into law.
3. Rationale of 15%: To equalize/ share the burden of income taxation with foreign corporations

BANK OF AMERICA NT & SA VS. CA- Remittance Tax