BIR Ruling [DA-307-97]

September 4, 1997 BIR RULING [DA-307-97] Sycip Gorres Velayo & Co. 6760 Ayala Avenue Makati City Attention: Atty. C.P. Noel Tax Division Gentlemen : This refers to your letter dated July 16, 1997 requesting on behalf of Sterling Products International, Inc., Philippine Branch , for ruling exempting it from the payment of the expanded withholding tax imposed under Revenue Regulations No. 12-94 for the taxable year 1997, on the ground that it has incurred operational losses for the years 1995 and 1996. Documents submitted to this Office show that in its audited financial statements for the years ending December 31, 1995 and 1996, particularly its Statements of Income and Retained Earnings, it is indicated therein that the corporation has incurred net operating losses in the respective amounts of P121,232,587.00 and P13,012,315.00. In reply, please be informed that under 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, the withholding tax prescribed in these regulations shall not apply to income payments of a payee who suffered net operating losses during the immediately preceding two (2) years. Accordingly, since it has incurred net operating losses for two consecutive years from 1995 to 1996, Sterling Products International, Inc., Philippine Branch is exempt from the payment of the creditable withholding tax prescribed under Revenue Regulations No. 12-94 for the year 1997. (BIR Unnumbered Ruling No. UN-061-95, dated February 13, 1995, citing BIR Ruling No. 126-94 dated August 15, 1994) IDSEAH 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. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Asst. Commissioner Legal Service