BIR Ruling [DA-309-97]

September 5, 1997 BIR RULING [DA-309-97] SGS Philippines, Inc. Don Tim Building 5468 So. Superhighway Makati City Attention: Mr. Felix M. Fiechter President Gentlemen : This refers to your letter dated February 13, 1997 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 1995 and 1996. In support of your request, you submitted copies of your income tax returns and audited financial statements for 1995 and 1996 showing your net operating losses in the respective amounts of P1,514,226.00 and P390,302.00. 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 two (2) 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) TcDIaA 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, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service)