Exemption from the Payment of 15% Withholding Tax — Interest Payments

February 13, 1981 BIR RULING NO. 039-81 29-b-8 088-79 039-81 Filpak Industries, Inc. Suite 301 SMS Bldg. Juan Luna Street Metro Manila Attention: Mr . Paterno B . Bejar Vice-President Gentlemen : This refers to your letter dated April 7, 1980 requesting confirmation to the effect that interest payments on loans granted to that Corporation by the Societe Generale Pour Favoriser Le Development Du Commerce Et de L' Industrie En France (HongKong Branch) are exempt from Philippine Income Tax. In reply thereto, I have the honor to inform you that income received by foreign governments, financing institutions owned, controlled, or enjoying refinancing by such foreign governments and international or regional financing institutions established by governments from their investments in the Philippines in loans, stocks, bonds, or other domestic securities, or from interest on their deposits in banks in the Philippines are exempt from income tax in accordance with Section 29(b)(8)(A)(1)(2) and (3) of the National Internal Revenue Code of 1977. In view thereof, and inasmuch as the Societe Generale Pour Favoriser Le Development Du Commerce Et de L' Industrie En France belongs to the Government of France (BIR Ruling No. 088-79), this Office is of the opinion as it hereby holds that your interest payments to said French corporation are not subject to the Philippine income tax, and consequently, not also subject to the 15% withholding tax prescribed by Section 53(b)(2) in relation to Section 54 of the Tax Code. Very truly yours, RUBEN B. ANCHETA Acting Commissioner