BIR Ruling [DA-042-98]

February 6, 1998 BIR RULING [DA-042-98] Ayala Life Assurance Incorporated Ayala Life Building 6786 Ayala Avenue Makati City Attention: Ms . Ma . Isabel T . Madamba Chief Financial Officer Gentlemen : This refers to your letter dated June 23, 1997 requesting for exemption from the payment of the expanded withholding tax for the taxable year 1997 on the ground that said corporation has incurred operational losses in the years 1995 and 1996 pursuant to Revenue Regulations No. 12-94, amending Revenue Regulations No. 6-85. Documents show that Ayala Life Assurance Incorporated is a domestic corporation with principal place of business at 6786 Ayala Avenue, Makati City; that your company makes use of the calendar year as basis of its accounting; and that based on the documents submitted to this Office, the same show that during the calendar years ending December 31, 1995 and December 31, 1996, your company incurred net operating losses in the amounts of P1,760,245.01 and P43,052,199.45, respectively. In reply, please be informed that Section 3 of Revenue Regulations No. 12-94, amending Section 4 of Revenue Regulations No. 6-85, otherwise known as the "Expanded Withholding Tax Regulations," provides that "SEC. 3. Section 4 of Revenue Regulations No. 6-85 is hereby amended to read as follows: SEC. 4. Exemption from Withholding . The withholding of tax prescribed in these regulations shall not apply to income payments in the following cases: xxx xxx xxx (d) In the case of a payee who suffered net operating losses during the immediately preceding two (2) years, LLpr xxx xxx xxx In view of the foregoing, and since it is shown that your company has incurred net operating losses for two (2) consecutive years in 1995 and 1996, it is exempt from the payment of the expanded withholding tax for the taxable year 1997 under Section 3, Revenue Regulations No. 12-94, amending Section 4 of Revenue Regulations No. 6-85. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, the facts would turn out to be different, then this ruling shall not apply and/or considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)