BIR Ruling [DA-231-96]

July 8, 1996 BIR RULING [DA-231-96] Ramon F. Garcia & Company Suite 410 Manila Bank Bldg. Ayala Avenue, Makati City Attention: Mr . Josefino F . Garcia Partner Gentlemen : This refers to your letter dated April 25, 1996 requesting in behalf of your client. The New Towers Development Corporation, for a ruling exempting your said client from the payment of the expanded withholding tax prescribed by Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax Code, as amended, on the ground that it suffered net operating losses for the years 1994 and 1995. Documents submitted show that for the years ended December 31, 1994 and 1995 your aforenamed client suffered losses in the respective amounts of P65,499,606 and P10,867,173. In reply, please be informed that Section 4(d) of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 provides viz: "SEC. 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) tax years. xxx xxx xxx Such being the case, and since your said client suffered net operating losses for the years 1994 and 1995 in the respective amounts of P65,499,606.00 and P10,867,173.00, this office is of the opinion as it hereby holds that income payments in favor of your client. The New Towers Development Corporation, for the year 1996 is exempt from the payment of the creditable withholding tax imposed under Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax Code, as amended. 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. (BIR Ruling No. 126-94 dated August 15, 1994) Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)