BIR Ruling No. 236-83

December 19, 1983 BIR RULING NO. 236-83 Gentlemen : This refers to your letter dated August 3, 1983 requesting confirmation of your opinion to the effect that interest payments to be made by CDCP Mining Corporation (CDCP) Mining) to the Societe Generale, HongKong Branch is exempt from income tax. It is represented that on November 9, 1979, CDCP Mining secured a US$5.0 million loan from Societe Generale, HongKong Branch, as part of a US$45,800,000 Medium Term Loan under the Loan Agreement dated November 9, 1979, which was participated in by 9 other banks; that the US$5.0 million loan from Societe Generale was a direct loan to CDCP Mining and was not coursed through a Foreign Currency Deposit Unit of any financial institution; and that Societe Generale is majority-owned and controlled by the French government. In reply thereto, I have the honor to inform you that income received by foreign governments, financing institutions owned, controlled or enjoying refinancing by foreign governments and international or regional financing institutions established by governments from their investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on their deposits in banks in the Philippines is exempt from income tax in accordance with Section 29(c)(B) (A)(1)(2) and (3) of the Tax Code, as amended. Such being the case, and inasmuch as the Societe Generale is majority owned and controlled by the French government (BIR Ruling No. 88-79 and BIR Ruling 39-81), this Office is of the opinion as it hereby holds that interest payments to be remitted by CDCP Mining to Societe Generale are not subject to Philippine income tax, and consequently, not also subject to the withholding tax provisions of Section 53(e)(2) in relation to Section 54 of the Tax Code. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue