BIR Ruling

May 21, 1974 The Honorable Ambassador Royal Belgian Embassy 9th Floor, Security Bank Bldg. 6778 Ayala Ave., Makati, Rizal S i r : This refers to your request for a ruling exempting from the withholding tax income derived from credits granted by members of a so-called "Pool" after processing and approval of Credit export and the Office National du Ducroire (OND). In reply, I have the honor to inform you that income derived from credits granted by a foreign government or by a financial institution which is owned, controlled or enjoys refinancing from said government is exempt from Philippine income tax, in accordance with Section 29(b)(7) of the Tax Code, as amended by Presidential Decree No. 69. Information furnished this Office disclosed that some of 50% of the fund of the so-called "Pool" are contributed by the Central Bank of Belgium, a Belgian government institution and six (6) other government financial institution. Accordingly, it is safe to conclude that the so-called "Pool" enjoys refinancing from the Belgian government. In view thereof, the income derived from the credits in question is not subject to Philippines income tax. Hence, the same is not subject to withholding tax provisions of Sections 53 and Tax Code. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYER SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."