BIR Ruling [DA-188-98]

May 14, 1998 BIR RULING [DA-188-98] Delfi of Switzerland Cocoa Specialities, Inc. Grd. Flr. Eurovilla II, 118 Herrera St., Legaspi Village Makati City Attention: Mr . Ricardo P . De Leon Finance Manager Gentlemen : This refers to your letter dated April 21, 1998 relative to your letter dated December 29, 1997 requesting for exemption from the payment of the expanded withholding tax under Revenue Regulations No. 12-94 on the ground that Delfi of Switzerland Cocoa Specialities, Inc. has suffered net operating losses during the immediately preceding two (2) tax years. cdlex In BIR Ruling No. DA-243-97 dated July 15, 1997 addressed to you on the same subject matter, this Office held "xxx xxx xxx "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 tax payments of a payee who suffered net operating losses during the immediately preceding two (2) taxable years. "Such being the case, and since as represented, Delfi of Switzerland Cocoa Specialities, Inc. has incurred net operating losses of P45,253,262.00 for the year 1996 and P41,386,277.00 for the year 1995 as shown by your Audited Financial Statements as of December 31, 1996 and 1995, Delfi of Switzerland Cocoa Specialities, Inc. is exempt from the payment of the creditable withholding tax prescribed under Revenue Regulations No. 12-94 for the year 1997. cdta "xxx xxx xxx" It appears that Delfi of Switzerland Cocoa Specialities, Inc. has incurred net operating losses in the amount of P138,289,424.00 as shown in its Audited Financial Statements as of December 31, 1997; and that to gain profit is a remote possibility since you are still suffering financial losses at this point in time. cdt 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 [now Section 57(B) of the Tax Code of 1997], the withholding tax prescribed in these regulations shall not apply to income payments of a payee who suffered net operating losses during the immediately preceding two (2) tax years. Such being the case, since Delfi of Switzerland Cocoa Specialities, Inc. has incurred net operating losses of P45,253,262.00 for the year 1996 and P138,289,424.00 as shown in its Audited Financial Statements for the year 1997, Delfi of Switzerland Cocoa Specialities, Inc. is exempt from the payment of the creditable withholding tax prescribed under said Regulations. (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. LLpr Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV (Deputy Commissioner) (Legal & Enforcement Group)