BIR Ruling No. 230-82

August 3, 1982 BIR RULING NO. 230-82 124-d 000-00 230-82 House of Investments, Inc. Grepalife Building 221 Buendia Avenue Makati, Metro Manila Gentlemen : This refers to your claim for tax credit of taxes withheld on dividends received by you for the year 1974 in the amount of P710,780.57. In this connection, please be informed that subsection (d) of Section 24 of the National Internal Revenue Code, as amended by PD Nos. 369 and 402, effective January 1 and March 1, 1974, respectively, reads as follows: "(d) Rate of tax on certain dividends . Dividends received by a domestic or resident foreign corporation from a domestic corporation liable to tax under this Chapter shall be subject to tax at 8.75%, on the total amount thereof, which shall be collected and paid as provided in Sections 53 and 54 of this Code." The law states that the tax of 8.75% will have to be imposed on the total amount of dividends received. This is a final tax, which is similar in nature to the tax on interests on foreign loans (3rd whereas clause of PD 369, 2nd whereas clause of PD 229-A, Sec. 4 of Revenue Regulations No. 8-73). This tax accrues even if the business operation at the end of the taxable year is a loss. Moreover, the law provides that the taxable dividends will be on the basis of 100% declaration thereof and not 25% only so that the result of the business operation in 1974 is actually a gain. By reason thereof, your request for the tax credit is, therefore, denied. This constitutes our final decision in this case. cd Very truly yours, RUBEN B. ANCHETA Acting Commissioner