Reexamination of the Nature and Status of the Export-Import Bank of Washington

October 19, 1959 BIR RULING NO. 529-59 Messrs. Ross, Selph & Carrascoso Attorneys-at-Law P. O. Box 781, Manila Gentlemen : In answer to your letter dated August 22, 1959, requesting reconsideration of B.I.R. Rulings No. 629, series of 1958, and No. 342, series of 1959, and at the same time revival of that dated July 26, 1956, I have the honor to inform you that, after a reexamination of the nature and status of the Export-Import Bank of Washington, this Office has finally decided to revoke said Rulings Nos. 629 and 342, as well as those issued after and consistent with them, and to revive our ruling of July 26, 1956. Accordingly, and in consonance with the aforesaid ruling dated July 26, 1956, we hereby lay down the rule that inasmuch as the Export-Import Bank of Washington is an independent agency of the United States Government, having been reincorporated as such by the Congress of the United States under the Export-Import Bank Act of 1945, and considering that under section 29(b)(7)(A) of the Tax Code income of foreign governments received from their investments in the Philippines in stock, bonds, or other domestic securities, or from interest on their deposits in banks in the Philippines are excludible from gross income, and considering further that under section 84(s) of said Code the term "securities" includes bonds, debentures, notes, or certificates, or other evidences of indebtedness, issued by any corporation, including those issued by a government or political subdivision thereof, with interest coupons or in registered form, and, therefore, notes executed by local banks or corporations evidencing obligations to repay loans extended to them by the Export-Import Bank of Washington falls within the meaning of the term "other domestic securities" used in said section 29(b)(7)(A), interest on loans extended by the latter to Philippine banks or corporations constitutes income of a foreign government from its investments in domestic securities within the meaning of section 29(b)(7)(A). Such being the case, said interest is exempt from Philippine income tax and, therefore, also from the withholding provisions of section 54 of the Tax Code. This supersedes previous rulings inconsistent therewith. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue