BIR Ruling

June 15, 1967 3rd Indorsement Respectfully returned to the Honorable, the Undersecretary of Finance, Manila, the within papers relative to the inquiry of the General Counsel, International Finance Corporation, as to whether or not foreign private investors who join with IFC in its investments in the Philippines are subject to Philippines taxes. LexLib The International Finance Corporation (IFC), an affiliate of the International Bank for Reconstruction and Development otherwise known as the World Bank and established by treaty (Articles of Agreement among its member governments of which the Philippines is one, is immune from taxation under Section 9 (a) of Article VI of IFC's Articles of Agreement reading: "The Corporation, its assets, property, income and its operations and transactions authorized by this Agreement, shall be immune from all taxation and from all customs duties. The Corporation shall also be immune from liability for the Collection or payment of any tax or duty." The interest payments on loans evidenced by bonds or other certificate of indebtedness which will be made by Philippine enterprises to IFC and with the latter being under obligation to account to foreign private investors their share thereof pursuant to a participation agreement by which such interest payments have been transferred or assigned to the foreign private investors is income to IFC as the holder of record of the aforesaid bonds or other certificate of indebtedness. In view of the foregoing, the interest payments which will be made by Philippine enterprises to IFC are not subject to the 30% withholding tax prescribed by Section 54 in relation to Section 53 of the Tax Code. (SGD.) MISAEL P. VERA Commissioner of Internal Revenue