Philippine Phosphate Fertilizer Corporation Can Remit Directly to the BIR the Final Tax Withheld on Interest Payments on Its Foreign Loans

June 17, 1987 BIR RULING NO. 166-87 51-a 000-00 166-87 Gentlemen : This refers to your letter dated January 5, 1987 requesting a ruling as to whether your client, Philippine Phosphate Fertilizer Corporation can remit directly to this Office the final tax withheld on interest payments on its foreign loans instead of the Philippine National Bank. It is represented that your client's interest payments for its foreign loans were paid from its offshore accounts, that it has remitted interest thru PNB Buendia account since it made use of the proceeds from its export earnings required to be repatriated to the Philippines; that PNB debited its account for the withholding tax whenever interest payment is made, and that you client wants to remit the withholding tax to this Office instead of the PNB. In reply thereto, I have the honor to inform you that your query is answered in the affirmative. Under Section 25 (b)(5)(A) of the Tax Code, as amended by Executive Order No. 37, interest on foreign loans contracted on or after August 1, 1986 shall be subject to a 20% tax. Under Section 51(a) of the same Code, the tax imposed by Section 25 (b)(5)(A) shall be withheld by payor-corporation and paid to this Office as provided in Section 52 of the Tax Code. In the instant case, your client and not PNB is the payor of the interest on foreign loans. Such being the case, your client is the party under the law, which should undertake the withholding of the tax and the remittance thereof to this Office. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner