Request to Reduce Withholding Tax on Interest Payments on Foreign Loan from 20% Final Withholding Tax to 10%

September 15, 1995 BIR RULING NO. 144-95 28 (b) (5) 000-00 144-95 ROHM LSI Design Philippines, Inc. 3rd Floor, 116 Building 116 Herrera St., Legaspi Village Makati, Metro Manila Attention: Ms . Flor A . Sibayan Accountant Gentlemen : This refers to your letters dated December 26, 1994 stating that your company is registered with the Board of Investments under Certificate of Registration No. 92-467 as engage in research and development in the field of electronics on a pioneer status under the Omnibus Investment Code of 1987, as a spin-off of one of the divisions of Rohm Electronics Philippines, Inc., that you stated operations on your own last April, 1994; that for the company to finance some of your equipment, you were given a credit time of Yen Seventy Million Only (Y70,000,000.00) by your mother company in Japan, Rohm Company, Ltd, with interest or 4.4% per annum payable semi-annually starting December 31, 1994. Based on the foregoing and since interest payments on a foreign loan are subject to 20% final withholding tax under Section 25(b)(5) of the Tax Code, as amended, you now request in behalf of Rohm Company Ltd., to reduce such withholding tax to 10%. aisadc In reply, please be informed that under Articles 11(3) of the RP-Japan Tax Treaty, pertinent portion of which reads, thus "(3) Notwithstanding the provisions of paragraph (2). the amount of tax imposed by the Philippines on the interest paid by a company, being a resident of the Philippines, registered with the Board of Investments and engaged in preferred pioneer areas of investments under the investments incentives laws of the Philippines to a resident of Japan, who is the beneficial owner of the interest, shall not exceed 10 per cent of the gross amount of the interest." your interest payment to Rohm Company, Ltd. of Japan shall be subject to a withholding tax with shall not exceed 10% of the gross amount of the interest. 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. cdt Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue