BIR Ruling [DA-284-97]

August 22, 1997 BIR RULING [DA-284-97] SyCip Gorres Velayo and Company 6760 Ayala Avenue Makati City Attention: Atty. C.P. Noel Tax Division Gentlemen : This refers to your letter dated July 15, 1997 requesting for exemption from the payment of the withholding tax pursuant to Revenue Regulations No. 12-94, amending Revenue Regulations No. 6-85. It is represented that the Philippine Branch of Smithkline Beecham Research Limited was registered with the Securities and Exchange Commission (SEC) on December 16, 1993 to engage in the manufacture of drugs and related products and in any trade and related business; that Smithkline makes use of the calendar year as basis of accounting; and that during the calendar years ending December 31, 1995 and December 31, 1996, SBRL incurred net operating losses in the amount of P28,724,483.00 and P209,819,721, respectively. In reply, please be informed that Section 3 of Revenue Regulations No. 12-94, amending Section 4 of Revenue Regulations No. 6-85, otherwise known as the "Expanded Withholding Tax Regulations" provides that "SEC. 3. Section 4 of Revenue Regulations No. 6-85 is hereby amended to read as follows: 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; cCaATD xxx xxx xxx Accordingly, this Office is of the opinion that Smithline Beecham Research Limited, Philippine Branch is exempt from the payment of withholding tax under Section 3, Revenue Regulations No. 12-94, amending Section 4 of Revenue Regulations No. 6-85. 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 not apply and/or considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Asst. Commissioner (Legal Service)