BIR Ruling No. 243-82

September 3, 1982 BIR RULING NO. 243-82 53-f 000-00 243-82 Sotero T. Segui & Co. Certified Public Accountants Rm. 323 J & T Building Sta. Mesa, Manila Attention: Mr . Sotero T . Segui Gentlemen : This refers to your letter dated August 4, 1982 requesting a ruling on whether the interest earned by a company on a loan granted to a sister company is subject to the expanded withholding tax. It is represented that the F. Jacinto Group of Corporations is a family corporation engaged in the business of manufacturing, marketing, insurance, printing, transportation, management and realty; that this group of corporations are at present managed by the Army, under Minister J. P. Enrile, upon instruction of the President of the Republic; that in some instances, one company borrows money from another sister company for their normal operation; and that the lending of money among the sister corporations are covered with board resolutions stating the amount and interest rate to be charged. In reply, I have the honor to inform you that under Revenue Regulations No. 13-78, as amended by Revenue Regulations No. 6-79; implementing Presidential Decree No. 1351, now Section 53(f) of the Tax Code, payments only to persons enumerated therein are subject to the withholding tax. Considering the interest payments on a loan made by the borrower corporation in favor of the creditor sister corporation are not among those specified in said Regulations, such interest payments are not subject to the withholding tax. However, since the aforesaid interest payments are not subject to withholding, the borrower corporation shall render an information return on such payments, pursuant to Section 77 of the Tax Code, as amended by Batas Pambansa Blg. 135 and as implemented by Section 21 of Revenue Regulations No. 1-82 dated March 18, 1982. cdtech Very truly yours, TOMAS C. TOLEDO Acting Commissioner