BIR Ruling [DA-170-96]

May 10, 1996 BIR RULING [DA-170-96] SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty. C.P. Noel Gentlemen : This refers to your letter dated June 13, 1995 requesting in effect for a ruling exempting your client, GST Philippines, Inc., (formerly Armco Marsteel Alloy Corporation) from the payment of the expanded creditable withholding tax imposed under Revenue Regulations No. 12-94 for the taxable year 1995 on the ground that it suffered net operating losses in 1993 and 1994. Documents submitted show that per your aforesaid clients' audited financial statements for the years ended December 31, 1993 and 1994 particularly its Statement of Income, it suffered losses in the respective amounts of P18,848,987.00 and P15,738,652.00 for the years 1993 and 1994. 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 a payee who suffered net operating losses during the immediately preceding two (2) taxable years. Such being the case, and since your said client has incurred net operating losses during the immediately preceding two consecutive years from 1993 and 1994, this Office is of the opinion as it hereby holds that your aforesaid client is exempt from the payment of the creditable expanded withholding tax prescribed under Revenue Regulations No. 12-94 on income payments to it for the year 1995. (BIR Ruling No. UN165-95 dated April 17, 1995) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, the facts turned out to be different, then this ruling shall be considered null and void. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: (SGD.) ALICIA L. TOMA CRUZ Head Revenue Executive Assistant (Legal Service)