Exemption from Philippine Income Tax — Dividends

March 23, 1981 BIR RULING NO. 056-81 029-b-8 000-78 056-81 Holland Milk Products, Inc. 6th Floor, Corinthian Plaza 121 Paseo de Roxas, Makati Metro Manila Attention: Mr . George K . Young Executive Vice-President Gentlemen : This refers to your letters dated February 5 and December 19, 1980 requesting a ruling to the effect that the dividends to be paid by you to Australian Dairy Corporation, one of your stockholders, is exempt from the payment of income tax. In reply thereto, I have the honor to inform you that income received from investments in the Philippines in stocks by foreign governments, are exempt from income tax in accordance with Section 29(b)(8)(A)(1) of the Tax Code. The instant case comes within the purview of the foregoing provisions, it appearing from the certification of the Minister of State for Primary Industry, Australia, that the Australian Dairy Corporation is a statutory authority established by the Parliament of the Commonwealth of Australia under the Dairy Produce Act of 1924, and therefore, it is an instrumentality of the Australian Government. Accordingly, this Office is of the opinion as it hereby holds, that the dividends which will be paid by you to the Australian Dairy Corporation are not subject to Philippine income tax, and consequently not also subject to the 35% withholding tax prescribed by Section 53(b)(2) in relation to Section 54 of the Tax Code. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner