BIR Ruling [DA-154-96]

April 29, 1996 BIR RULING [DA-154-96] SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. C.P. Noel Gentlemen : This refers to your letter dated March 20, 1996 requesting for a ruling exempting your client, GST Phils. Inc., from the payment of expanded withholding tax imposed under Revenue Regulations No. 12-94 on the ground that it has suffered net operating losses in 1994 and 1995. Documents submitted show that per its audited financial statements for the years ended December 31, 1994 and 1995 particularly its Statements of Income and Deficit, it suffered losses in the respective amounts of P15,738,652.00 and P425,999.00 for the years 1994 and 1995. 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 prescribed in these regulations shall not apply to income payments to payee who suffered net operating losses during the immediately preceding two (2) taxable years. Such being the case, and since your client have incurred net operating losses during the immediately preceding two (2) consecutive years from 1994 and 1995, this Office is of the opinion as it hereby holds that your aforesaid client is exempt from the creditable expanded withholding tax prescribed under Revenue Regulations No. 12-94 on income payments to it for the year 1996. (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, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)