Philippine ruling that guarantee fees are not interest under Philippines-Korea (Rep.) tax treaty

The Bureau of Internal Revenue has confirmed that "guarantee fees" are not "interest" for the purposes of a tax treaty. In a ruling (BIR ITAD Ruling No. 122-05) dated 27 October 2005, the BIR found that guarantee fees (for loan guarantees) paid by a company registered in the Philippines to a South Korean company, did not fall within the purview of the "Interest" article of the Philippines-Korea (Rep.) tax treaty. Such fees should instead be dealt with under the "Other Income…