Exemption from Tax under the RP-US Tax Treaty

April 8, 1988 BIR RULING NO. 132-88 25 (b) (5) 000-00 132-88 Gentlemen : This refers to your letter dated February 12, 1988 to the Central Bank of the Philippines which was referred to this Office for reply requesting a ruling whether interest to be paid on a loan obtained by you from the Overseas Private Investment Corporation, an agency of the United States, in exempt from tax under the RP-US Tax Treaty. In reply, please be informed that pursuant to paragraph 4(a), article 12 of the RP-US Tax Treaty, interest derived by one of the Contracting States, or an instrumentality thereof (including the Central Bank of the Philippines, the Federal Reserve Bank of the United States, the Export-Import Bank of the United States, the Overseas Private Investment Corporation of the United States, and such other institutions of either Contracting State, as the competent authorities of both Contracting States may determine by mutual agreement), shall be exempt from tax by the other Contracting State. Accordingly, interest on the loan obtained by you from the Overseas Private Investment Corporation is exempt from Philippine income tax and, consequently, to the withholding tax. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner