BIR Ruling [DA-052-97]

February 2, 1997 BIR RULING [DA-052-97] Sycip, Salazar, Hernandez and Gatmaitan 105 Paseo de Roxas 1200 Makati City Attention: Atty . Ernesto S . Taino Gentlemen : This refers to your letter dated November 6, 1996, requesting on behalf of your client, Ogden Quezon Power, Inc. confirmation of your opinion that interest income on a contemplated loan to be extended or guaranteed by the Export-Import Bank of the United States and/or insured against political risks by the Overseas Investment Corporation of the United States in favor of your client, would be exempt from Philippine income. It is represented that Ogden Quezon Power, Inc., a Philippine limited partnership, will own, construct and operate an approximately 440 megawatt coal-fired thermal power generation facility to be located in Mauban, Quezon; and that financing is being arranged which may involve the Export-Import Bank of the United States extending/guaranteeing, and/or the Overseas Private Investment Corporation of the United States providing political risk insurance to a loan to your client. In reply, please be informed that pursuant to paragraph 4(b), Article 12 of the RP-US Tax Treaty, interest derived by a resident of one of the Contracting State or an instrumentality thereof, shall be exempt from tax by the other Contracting State. Accordingly, since the loan will be extended/guaranteed by the Export-Import Bank of the United States and/or insured against political risks by the Overseas Private Investment Corporation of the United States, your opinion that the interest income on such contemplated loan to be paid by your client is exempt from Philippine income tax and consequently from the withholding tax, is hereby confirmed. (BIR Ruling No. 011-96) This ruling is subject to verification and the same shall be revoked if after verification the facts are different from those represented. cdtech Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)