BIR Ruling [UN-001-96]

January 2, 1996 BIR RULING [UN-001-96] Sycip Gorres Velayo & Co. 6760 Ayala Avenue Makati, Metro Manila Attention: Atty . J . A . Osana Gentlemen : This refers to your letter dated January 24, 1995 requesting in behalf of your client, European Educational Foundation, Inc., a non-stock , a non-profit corporation, for a ruling exempting it from the payment of the expanded withholding tax imposed under Revenue Regulations No. 12-94 on the ground that it has incurred operational losses for the years 1992 and 1993. Documents submitted to this Office show that in its financial statements for the years ended December 31, 1992 and 1993 particularly its Statement of Income, it is indicated that European Educational Foundation, Inc. has incurred net operating losses in the respective amounts of P866,266.71 and P2,793,409.00. In reply, please be informed that under Section 4(d) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, implementing Section 50(b) of the Tax Code as amended, the withholding tax prescribed in these regulations shall not apply to income payments of a payee who suffered net operating losses during the immediately preceding two (2) tax years. Such being the case, and since it has incurred net operating losses for two consecutive years from the 1992 and 1993, European Educational Foundation, Inc. is exempt from the payment of the creditable withholding tax prescribed under Revenue Regulations No. 12-94 for the year 1994. (BIR Ruling No. UN-396-95 dated November 14, 1995) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation the facts turned out to be different, then this ruling shall be considered null and void. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)