BIR Ruling [DA-283-96]

July 30, 1996 BIR RULING [DA-283-96] Diaz, Murillo, Dalupan Certified Public Accountants 5/F Don Jacinto Building Dela Rosa cor. Salcedo Sts. Legaspi Village, Makati City 1200 Attention: Atty . Moises R . Villanueva Tax Partner Gentlemen : This refers to your letter dated April 29, 1996 stating that your client, Asia Technology Partners (ATP) is duly registered with the Securities and Exchange Commission on June 17, 1993 as Philippine Branch of ATP USA; that it is engaged in the customization installation and support services relating to securities trading system; that for two (2) consecutive years, i.e., 1994 & 1995, ATP has incurred losses in the amounts of P1,924,469 and P414,780, respectively as evidenced by its financial statements and income tax returns attached thereto; and that as of December 31, 1995 and 1994, the creditable withholding tax in the respective amounts of P209,486.68 and P149,437 have not yet been applied because of consecutive losses suffered during the said years. Based on the foregoing, you are in effect requesting that the income payments to be made to your abovenamed client be exempt from the 1% creditable expanded withholding tax prescribed under Revenue Regulations No. 12-94. In reply, please be informed that under Section 4(d) of Revenue Regulations No. 12-94, implementing Section 50(b) of the Tax Code, as amended, the withholding tax therein prescribed shall not apply to income payments of a payee who suffered net operating losses during the immediately preceding two (2) years. Accordingly, since ATP has suffered net operating losses during the years 1994 and 1995, its income payments for the year 1996 shall not be subject to the 1% creditable expanded withholding tax prescribed in said Revenue Regulations No. 6-85. (BIR Ruling No. 061-95 dated February 13, 1995 citing BIR Ruling No. 126-94; BIR Ruling No. DA-080-96 dated February 21, 1996) cdt This ruling is being issued on the basis of the foregoing representation and will be revoked if it turns out later that the facts are not as represented. Very truly yours, ALICIA L. TOMACRUZ Head Rev. Executive Assistant (Legal Service)