BIR Ruling

September 27, 1973 Messrs. Ozaeta, Romulo, de Leon, Mabanta & Reyes 4th Floor, JMT Building 6764 Ayala Avenue Makati, Rizal D-708 Gentlemen : This refers to your letter dated May 29, 1973 requesting confirmation of your opinion that starting January 1, 1973, the interest paid by your client, Ford Philippines, Inc. to its foreign suppliers and affiliates, namely: Ford U.K., Ford Germany, Ford Canada and Ford Australia, on importations under deferred payment terms (180 days or longer) is subject to the withholding tax at the rate of 15% only as prescribed in Presidential Decree No. 131, dated March 13, 1973. In reply, I have the honor to inform you that purchases from abroad under deferred payment terms are considered by the Central Bank as foreign borrowings, and, therefore, such purchases qualifies for purposes of Presidential Decree No. 131. However, the reduced 15% tax imposed on the interest portion of such foreign borrowings by Presidential Decree No. 131 shall apply only to such borrowings as were transacted on or after January 1, 1973. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."