BIR Ruling [DA-272-96]

July 25, 1996 BIR RULING [DA-272-96] Philippine Testing and Control Services, Inc. Don Tim Building 5468 So. Superhighway, Makati P.O. Box 2174, MCPO 1261 Metro Manila Attention: Mr. Felix M. Fiechter President Gentlemen : This refers to your letter dated March 22, 1996 requesting exemption from the 1% creditable expanded withholding tax prescribed under Revenue Regulations No. 12-94, on the ground that you have suffered net operating losses during the years 1993, 1994 and 1995. In support of your request, you submitted copies of your income tax returns and audited financial statements for 1993 and 1994 and unaudited financial statements for 1995 showing net operating losses in the respective amounts of P1,174,158.00, P3,304,634.00 and P2,364,265.00. You have however, assured this office that once the audit of your 1995 financial statements is finalized you will furnish us a copy of the same as well as your income tax returns for the said year. In reply, please be informed that 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, provides viz: "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 Such being the case, since you suffered net operating losses during the immediately preceding three (3) taxable years, income payments made to you shall be exempt from the 1% creditable expanded withholding tax. (BIR Ruling No. DA 080-96 dated February 21, 1996) 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. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: (SGD.) ALICIA L. TOMACRUZ Head Rev. Executive Assistant Legal Service