Exemption from Taxation — Remittances of Payment

September 30, 1981 BIR RULING NO. 187-81 24-00 000-79 187-81 Pambansang Korporasyon sa Elektrisidad Bonifacio Drive Port Area, Metro Manila Attention: Mr . A . L . Xavier, Jr . Treasurer Gentlemen : This refers to your letters dated June 16, 1979 and August 10, 1981 requesting a ruling that any payment you will make in liquidation of foreign loans you obtained from the Yasuda Trust & Banking Co., Ltd. and the Toyo Trust & Banking Co. Ltd., are exempt from any tax, levy, impost, duty, charge, or fee of any nature whatsoever payable to the Government of the Philippines or any ministry, department, agency, political or administrative subdivision or taxing authority thereof. cdtech In reply, please be informed that any and all of your remittances of payment, whether representing principal, interest or other charges, to the Yasuda Trust and Banking Co., Ltd. and the Toyo Trust and Banking Co., Ltd, pursuant to the Loan and Guarantee Agreement entered by and executed between the two of you on June 6, 1979 shall be exempt from taxation in accordance with Section 8(b) of R.A. No. 6395, as amended by P.D. No. 1360, the pertinent portion of which provides as follows: "Section 8(b). Foreign Loans . . . . xxx xxx xxx "The loans, credits and indebtedness contracted under this subsection and the payment of the principal, interest and other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services, by the Corporation, paid from the proceeds of any loan, credit or indebtedness incurred under this Act, shall also be exempt from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions previously and presently imposed, and to be imposed by the Republic of the Philippines, or any of its agencies and political subdivisions." Accordingly, you are under no legal obligation to deduct and withhold any tax on your payments for the loan extended to you by the abovenamed foreign creditors. Very truly yours, RUBEN B. ANCHETA Acting Commissioner