BIR Ruling [DA-262-97]

August 5, 1997 BIR RULING [DA-262-97] Steniel Cavite Packaging Corporation Gateway Business Park General Trias, Cavite Attention: Mr. Paul Richard T. Camagian Comptroller Gentlemen : This refers to your letter dated May 30, 1997 requesting in effect for exemption from the payment of the creditable withholding tax on your proposed sale of a parcel of land pursuant to Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94. It appears that the Steniel Cavite Packaging Corporation is a corporation engaged in packaging business; that the company started its commercial operation in the last quarter of 1995; and that it incurred losses from its operation during the taxable years 1995 and 1996 in the amount of P98,757.00 and P37,710,713.00, respectively. In reply, please be informed that Section 3 (d) of Revenue Regulations No. 12-94, amending Revenue Regulations No. 6-85, otherwise known as the "Expanded Withholding Tax Regulations", provides; "Sec. 3. Sec. 4 of Revenue Regulations No. 6-85 is hereby amended to read as follows: "Sec 4. Exemption from withholding. The withholding of tax prescribed in these regulations shall not apply to income payments in the following cases: AcSHCD 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, since your company suffered net operating losses during the immediately preceding two (2) tax years, 1995 and 1996, this Office is of the opinion as it hereby holds that your proposed sale of real property is exempt from the creditable withholding tax. 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. (BIR Ruling No. 126-94 dated August 15, 1994) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service)