BIR Ruling

March 22, 1974 Napoleon C. Mansilla Senior Vice President Philippine Veterans Bank Bonifacio Drive, Port Area Manila S i r : This refers to your letter dated August 22, 1973 requesting information whether the interest paid to a foreign supplier on importations of goods on Documents Against Acceptances (D/A) or Open Account (O/A) basis is embraced within the contemplation of Presidential Decree No. 131, lowering the tax on interest on "foreign loans" from 35% to 15%. cdt a In reply, I have the honor to inform you that the foregoing arrangements are not "foreign loans" within the contemplation of Presidential Decree No. 131 which amended Sections 24(b) and 53(b)(2) of the Tax Code by reducing the tax on the interests on foreign loans from 35% to 15%, pursuant to existing Central Bank rules and regulations implementing R.A. No. 6142 (New Foreign Borrowing Act); that short term credits, including obligations payable under O/A or D/A arrangements maturing within a period of not exceeding 360 days, are not treated as foreign borrowings for purposes of computing debt service ceiling as required by the said law. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5