BIR Ruling [UN-087-95]

March 3, 1995 BIR RULING [UN-087-95] Indo Phil Textile Mills, Inc. 14th Floor, China Bank Bldg. Paseo de Roxas cor. Villar Street 1226 Makati, Metro Manila Attention: Mr . L . D . Sherma Senior Vice President - (F & C) Gentlemen : This refers to your letter dated February 16, 1995, in effect requesting exemption from the 1% creditable expanded withholding tax of the income payments made to you by any of your customers who belongs to the top 5,000 corporations on their local purchase of spun yarn. It is represented that you are registered with the Board of Investments (BOI) as an Expanding Producer of Spun Yarn on a preferred Non-Pioneer Status under the Omnibus Investments Code of 1987; and that you have suffered net operating losses during the immediately preceding two (2) years, as evidenced by xerox copies of your 1992 and 1993 income tax returns with Financial Statements duly audited by your external auditors, Sycip, Gorres, Velayo & Co. attached therein. 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 therein prescribed shall not apply to income payments of a payee who suffered net operating losses during the immediately preceding two (2) years. Such being the case, the income payments made to you as a local supplier of spun yarn by any of the top 5,000 corporations in the Philippines shall not be subject to the 1% creditable expanded withholding tax prescribed in Section 1(n) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94. (BIR Ruling No. UN-275-94, citing BIR Ruling No. 126-94 dated August 15, 1994) This ruling is issued on the basis of the foregoing representations. However, if upon investigation the facts turned out to be different, then this ruling shall be considered null and void. cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)