Request by Atlas Consolidated Mining and Devt. Corp. for Suspension of Payment of Withholding Taxes

November 14, 1985 BIR RULING NO. 205-85 24-f 000-00 205-85 Gentlemen : This refers to your letter dated August 23, 1985 written in behalf of your client, Atlas Consolidated Mining and Development Corporation, requesting suspension of payment under LOI No. 1416 of the withholding taxes otherwise payable by it on interest due on its foreign loans from various foreign creditor banks. You have represented that it is a standard covenant in almost all foreign loan agreements that the Philippine withholding tax on interest is passed on to the borrowers as the foreign creditor-banks in agreeing to grant the loan, require that, repayment/remittance of their principal and interest shall be kept whole without any deduction for any Philippine tax; and that said covenant exists in all the foreign loan agreements of your client. In reply, I have the honor to inform you that the above request of your client is hereby granted. Pursuant to LOI No. 1416, the Minister of Trade and Industry has issued on August 9, 1984, a Certificate of Eligibility to Suspend Payments (No. MTI-1416-002) which entitles your client, Atlas Consolidated Mining and Development Corporation, to the suspension of the payment of all taxes, duties, fees, imposts and other charges, whether direct or indirect, due and payable by the said Mining Company to the National and Local Governments. The withholding tax on interest due on its foreign loans is a personal liability of your client. (See Commissioner of Internal Revenue vs. Malayan Insurance Co., 21 SCRA 544) Moreover, it assumed payment of the tax otherwise due from the non-resident foreign lenders, thus becoming directly or indirectly liable for the said tax, payment of which can be suspended, pursuant to LOI No. 1416. However, the suspension is subject to the conditions (1) that the foreign loan has been contracted for use on its mining or mining related activities; and (2) that the suspension privilege shall commence only from August 9, 1984, date of issuance of the said Certificate of Eligibility to Suspend Payment. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner