Dividends to Be Remitted to Netherlands Development Finance Company Not Subject to Philippine Income Tax

June 25, 1985 BIR RULING NO. 102-85 29-c-8 103-84 102-85 Gentlemen : This refers to your letter dated February 15, 1985 requesting a ruling as to whether or not the dividends to be remitted by your client, Planters Development (Planters) to the Netherlands Development Finance Company (FMO) are exempt from Philippine income tax. It is represented that FMO is a financial institution of which 51% of its shareholdings is owned by the Royal Netherlands Government; and that it has investments in preferred shares of Planters. In reply thereto, I have the honor to inform you that income received by foreign governments, financing institutions owned, controlled or enjoying refinancing by 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 is exempt from income tax pursuant to Section 29(c)(8)(A)(1)(2) and (3) of the Tax Code, as amended. aisadc Such being the case, and inasmuch as FMO is 51% owned and controlled by the Royal Netherlands Government, this Office is of the opinion as it is hereby holds that the dividends to be remitted to FMO are not subject to Philippine income tax, and consequently, not also subject to the withholding tax provisions of Section 53(e)(2) in relation to Section 54 of the Tax Code. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner