BIR Ruling

July 15, 1977 Philippine Cellophane Film Corporation Herdis Bldg., 180 Salcedo St. Legaspi Village, Makati, Rizal Attention: Mr . Jerry R . Orlina Vice President & Treasurer Gentlemen : This refers to your request for confirmation that the interest payable on the loans you acquired from Banque de LaIndochine and Banque Francaise du Commerce Exterieur, both of France, are exempt from income tax under Section 29(b)(7) of the Tax Code. In reply, you are advised that the certification of the French Embassy which you submitted to this Office merely states that the credit granted by the aforementioned banks are eligible for refinancing by the French Bank for Foreign Trade and French Central Bank. It does not, however, certify that the aforementioned creditor banks actually are enjoying refinancing from the French Bank for Foreign Trade and French Central Bank. Neither does said certificate attest to the fact that the latter two banks are banks of the French Government. In other words, you have not satisfactorily proved that the creditor banks are among those mentioned in subsection (7) of Section 29 of the Tax Code whose income are exempt from income tax. In view thereof, it is the opinion of this Office that your interest payments to the abovenamed nonresident banks are subject to the withholding tax prescribed in Section 53(b)(2) of the Tax Code. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8