Whether or Not the Interest Payments to Be Made to Post-Och Kreditbanken, PKBanken is Subject to Income Tax

May 25, 1984 BIR RULING NO. 103-84 29-c-8-236-83-103-84 Gentlemen : This refers to your letter dated February 10, 1984 requesting a ruling as to whether or not the interest payments to be made by your clients, Trans-Malayan Shipping, Inc., Trans Swedish Shipping, Inc. and Trans-European Shipping, Inc., to Post-Och Kreditbanken, PKBanken is subject to income tax. It is represented that your aforementioned clients secured a foreign loan from Post-Och Kreditbanken, PKBanken a foreign bank 99.96 percent of the share capital of which is owned by the Swedish Government. 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. Such being the case, and inasmuch as the Post-Och Kreditbanken, PKBanken is 99.96% owned and controlled by the Swedish Government, this office is of the opinion as it hereby holds that interest payments to be remitted by Trans-Malayan Shipping, Inc., Trans Swedish Shipping, Inc. and Trans European Shipping, Inc. to Post-Och Kreditbanken, PKBanken 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