BIR Ruling [DA-073-96]

February 19, 1996 BIR RULING [DA-073-96] Sycip Gorres Velayo & Co. 6760 Ayala Avenue 1206 Makati City Attention: Atty . E . C . Alcantara Tax Division Gentlemen : This refers to your letter dated January 17, 1996, requesting in behalf of your client, Del Monte Philippines, Inc., for a certificate of exemption from the creditable expanded withholding tax imposed under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, on the ground that it has suffered net operating losses during the last two (2) taxable years. In support of your request, you submitted xerox copies of the income tax returns of your client for the fiscal years ended June 30, 1994 and June 30, 1995 showing that it has incurred losses amounting to P19,793,515.00 and P29,380,311.00, respectively. In reply, please be informed that under Section 4(d) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax Code, as amended, the withholding tax therein prescribed shall not apply to income payments of a payee who suffered net operating losses during the immediately preceding two (2) years. Accordingly, since Del Monte Philippines, Inc. has suffered net operating losses during the fiscal years ended June 30, 1994 and June 30, 1995, its income payments shall not be subject to the 1% creditable expanded withholding tax prescribed in said Revenue Regulations No. 12-94 amending Revenue Regulations No. 6-85. (BIR Ruling No. 061-95 dated February 13, 1995 citing BIR Ruling No. 126-94 dated August 15, 1994) This ruling is being issued on the basis of your representations and will be considered null and void if it turns out later that the facts are not as represented. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)