Interest Payments Made to Sister Company Not Subject to Withholding Tax

April 23, 1984 BIR RULING NO. 073-84 53-f-243-82-073-84 Gentlemen : This refers to your letter dated August 17, 1983 requesting a ruling as to whether interest payments to be made by the Polo Realty Corporation to its sister company, the St. Gabriel Realty and Development Corporation on loan made by the latter to the former is subject to the expanded withholding tax. In reply, I have the honor to inform you that under Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79, implementing Presidential Decree No. 1351, now Section 53(f) of the Tax Code, payments only to persons enumerated therein are subject to withholding tax. Considering that interest payments on loans are not among those specified in said Regulations, said interest payments are not subject to the withholding tax. However, since the aforesaid interest payments are not subject to withholding, the borrower corporation shall render an information return on such payments, pursuant to Section 77 of the Tax Code, as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner