Exemption from Philippine Income Tax

September 5, 1979 BIR RULING NO. 088-79 Exemption from Philippine income tax This refers to your letter dated July 10, 1978 requesting a ruling as to whether or not the interest income arrived or will be derived by your client, Societe Generale Pour Favoriser Le Developpement Du Commerce Et De L' Industrie En France from loans within the Philippines are subject to the 15% withholding tax prescribed by Section 53(b)(2) in relation to Section 54 of the Tax Code. 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) & (3) of the Internal Revenue Code of 1977. casia In view thereof, and it appearing from the certification of the manager of the Treasury Department of the Ministry of Economic and Finance, Government of France dated June 1, 1978 that the Societe Generale Pour Favoriser Le Developpement Du Commerce Et De L' Industrie En France belongs to the State, and that transfers or free distributions of shares cannot exceed one quarter of the capital, this Office is of the opinion as it hereby holds that the interest payments on loans within the Philippines 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.