BIR Ruling [DA-130-99]

March 3, 1999 BIR RULING [DA-130-99] Pacific Products, Inc. 3-D JMT Corporate Condominium ADB Ave., Pasig City Attention: Jose A . Patag Manager Credit & Collection Gentlemen : This refers to your letter dated July 10, 1998 requesting for the renewal of your certificate of tax exemption under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, on the ground that you have suffered net operating losses during the years 1995, 1996 and 1997. In reply, please be informed that the provisions of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, have been expressly revoked by Revenue Regulations No. 2-98 the subject of which is "Implementing Republic Act No. 8424, relative to the Withholding on income subject to the Expanded Withholding Tax and Final Withholding Tax, Withholding of Income Tax on Compensation, Withholding of Creditable Value-added Tax and other Percentage Taxes." It will be noted that Section 2.57.5 thereof enumerates the person whose income payments are exempt from the withholding of creditable income tax but does not include income payment made to a payee who suffered net operating losses during the immediately preceding two (2) tax years. Accordingly, income payments made to you by any of the top 5,000 corporation shall be subject to 1% creditable income tax imposed under Section 2.52.2 (M) of said Revenue Regulations No. 2-98. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)