BIR Ruling [DA-205-04]

April 12, 2004 BIR RULING [DA-205-04] Basic Consolidated, Inc. 7th Floor Basic Petroleum Building 104 Carlos Palanca Jr. Street, Legaspi Village, Makati City Attention: Mr. Carlos A. Rosales VP-Corporate Secretary S i r : This refers to your letter dated May 8, 2002 requesting exemption from the payment of the creditable withholding to imposed under Revenue Regulations No. 12-94, on the ground that your company has suffered net operating losses during the immediately preceding two tax years, i.e. 2000 and 2001. In reply, please be informed that the exemption from the creditable withholding tax under Section 4 of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 which provides that "Section 4. Exemption from Withholding . The withholding of tax prescribed in these regulations shall not apply to income payments in the following cases: xxx xxx xxx "(d) In the case of a payee who suffered net operating losses during the immediately preceding two (2)years; xxx xxx xxx is no longer a ground for exemption under Section 2.57.5 of Revenue Regulations No. 2-98, the new regulations relative to the Withholding on Income subject Withholding Tax, Withholding of Creditable Value-Added Tax and other Percentage Taxes which took effect on May 24, 1998. Accordingly, we regret to deny your application for exemption from the creditable withholding based on the "2-year operating loss", for lack of legal basis. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group