Interest Payments to be Made by Cypress Semiconductor Phil. Subject to Final Withholding Tax of 15% Preferential Rate

September 10, 1998 BIR RULING NO. 132-98 000-00-132-98 Joaquin Cunanan & Co. 14 th Floor, Multinational Bancorporation Center Ayala Avenue Makati City Attention: Ms . Tomasa H . Lipana Managing Partner Tax and Corporate Services Gentlemen : This refers to your letter dated December 18, 1997 requesting confirmation of your opinion that interest payments to be made by your client, Cypress Semiconductor Philippines, Inc. (CSPI) to Cypress Semiconductor Corporation (CSC) in consideration of the loan which the latter will make available to the former, is subject to a final withholding tax at the preferential rate of 15% pursuant to the provisions of the RP-US Tax Treaty. It is represented that CSPI is a corporation organized and existing under the laws of the Philippines; that CSC, on the other hand, is a corporation organized and existing under the laws of Delaware, USA; that CSC is not doing business in the Philippines; and that CSPI has obtained a loan from CSC amounting to US$47,788,168.00 with interest of 5.85% per annum. In reply, please be informed that Article 12(2) of the RP-US Tax Treaty, provides as follows: "Article 12 "Interest "xxx xxx xxx "2. Interest derived by a resident of one of the Contracting State from sources, within the other Contracting State shall not be taxed by the other Contracting State at a rate in excess of 15 percent of the gross amount of such interest. "xxx xxx xxx" Accordingly, your opinion that interest payments which CSPI shall remit to CSC shall be subject to the 15% withholding tax rate pursuant to the aforequoted provision of the RP-US Tax Treaty, is hereby confirmed. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. dctai Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue