The India-Philippines DTAA, in force since 21 March 1994, is one of the older-vintage treaties this platform covers -- dividends are taxed at 15% or 20%, interest at 10% or 15%, and royalties at 15%, and the treaty does not contain a general Most Favoured Nation clause.
The India-Philippines DTAA -- rates and scope
The India-Philippines Double Taxation Avoidance Agreement, per the Philippine Bureau of Internal
Revenue's own hosted treaty text, was signed 12 February 1990 in Manila and entered into force 21 March
1994 -- among the older-vintage treaties this platform covers. Withholding rates are: dividends at 15%
where the recipient company holds at least 10% of the paying company's shares, or 20% in all other cases;
interest at 10% where paid to financial institutions, insurance companies, or on public bonds, or 15%
otherwise; and royalties at 15%, specifically where paid by a Board-of-Investment-registered enterprise or
under approved technology arrangements. This platform could not confirm the treaty contains a distinct,
separately-rated Fees for Technical Services article the way many of India's more modern treaties do, and
recommends confirming the exact treatment of technical-service-fee income with a chartered accountant
before relying on a specific rate.
No general MFN clause
Unlike India's treaties with the Netherlands, France, Switzerland, Spain, and Sweden -- each covered
separately on this platform, each containing a Most Favoured Nation rate-reduction clause -- the
India-Philippines DTAA's protocol does not contain a general MFN clause covering dividends, interest, or
royalties. It has only a narrower consultation provision limited to shipping and air-transport income:
if the Philippines grants more favorable treatment to another country's shipping or airline income, the
two governments agreed to consult on comparable treatment. This platform explicitly does not present this
narrower provision as a general MFN clause.
Practical filing points for an NRI connected to the Philippines
Indian-source income paid to a Philippines resident is subject to Section 195 TDS, generally at the
rates set by the Income Tax Act unless a lower treaty rate applies and is properly claimed with a Tax
Residency Certificate and Form 10F. Form 15CA (and Form 15CB where applicable) is required before
remittance abroad. No amendment or protocol to this treaty since 1990/1994 could be confirmed, so it
remains governed by the original text.
Common mistakes in this area for NRIs connected to the Philippines:
- Assuming the India-Philippines treaty carries a general MFN clause, when its protocol only has a
narrower shipping/air-transport consultation provision.
- Not confirming the exact treatment of technical-service-fee income, given the treaty's older
vintage and lack of a distinct FTS article.
- Applying dividend/interest rates without checking which tier (shareholding percentage, recipient
type) actually applies.
