BIR Ruling

July 28, 1975 Telefunken Semiconductors (Phil.) Inc. Stanford Bldg., E. Rodriguez Jr., Ave. Barrio Ugong, Pasig, Rizal Attention: Mr . Manfred H . Osaka General Manager Gentlemen : This refers to your letter dated July 24, 1975 requesting a ruling as to the taxability of income derived by the German Development Company from Philippine sources. cdt It appears that the Deusche Gesellschaft fur wirtschaftliche Zusammenarbeit (Entwicklungsgesellschaft) or the German Development Company has granted loans in favor of that Corporation as well as the Triumph International (Philippines) Inc., 2196 Paraiso St., Dasmarias Village, Makati, Rizal; and that from the evidence submitted, the German Development Company is a German financing institution, totally owned and controlled by the Government of Federal Republic of Germany. Under Section 29(b)(7) of the Tax Code, as amended by Presidential Decree No. 69, income received from loans given by financing institutions owned or controlled by a foreign government is exempt from income tax. acd In view thereof, it is the opinion of this Office that the income derived by the German Development Company is not subject to Philippine income tax. Accordingly, the same is not subject to the withholding tax provisions of Section 53 and 54 of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue