BIR Ruling [DA-044-98]

February 6, 1998 BIR RULING [DA-044-98] Worldwide Agricultural Development Corporation Minda, Carmen, Davao del Norte Attention: Mr. Rufino F. Mutuc, Jr. Vice President Finance Gentlemen : This refers to your letter dated November 24, 1997 requesting for a certificate of exemption from the creditable withholding tax imposed under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, on the ground that you suffered net operating losses during the last two (2) taxable years ended December 31, 1995 and December 31, 1996. Documents submitted show that per your audited financial statements for the calendar years ended December 31, 1995 and December 31, 1996, you suffered losses in the amounts of P111,105,437.00 and P103,065,640.00, respectively. In reply, please be informed that Section 3 of Revenue Regulations No. 12-94, amending 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: "Section 4. Exemption from Withholding . The withholding of the 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) tax years; xxx xxx xxx" Such being the case, and since you have incurred net operating losses during the immediately preceding two (2) years, this Office is of the opinion as it hereby holds that you are exempt from the creditable withholding tax prescribed under Revenue Regulations No. 12-94. (BIR Ruling No. 126-94 dated August 15, 1994) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)