BIR Ruling No. 047-82

March 3, 1982 BIR RULING NO. 047-82 053-f 000-00 047-82 Investors Assurance Corporation 607-611 Bank of the Philippine Islands Building Plaza Cervantes, Binondo Metro Manila Attention: Mr . Raul C . Calderon Asst . Vice President Gentlemen : In reply to your letter dated February 4, 1981, inquiring whether the interest on the 40% premium reserve to be remitted by you to the Societe Commerciale de Reassurance, a non-resident foreign corporation domiciled in France, are subject to the withholding tax at the rate of 15% in accordance with paragraph 2 of Article 11 of the RP-France Tax Treaty as treated in their letter to you dated January 26, 1981, please be informed that paragraph 4 of Article 11 of said Treaty defines the term "interest" as follows: "The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article." The foregoing definition does not include the interest on the premium reserve. Accordingly, said interest is subject to the 35% withholding tax imposed by Section 53(b) of the Tax Code. cdt Very truly yours, RUBEN B. ANCHETA Acting Commissioner