BIR Ruling [UN-384-95]

October 30, 1995 BIR RULING [UN-384-95] SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty . F . G . Tagao Tax Division Gentlemen : This refers to your letter dated August 1, 1995 requesting in behalf of Cable and Wireless PLC Philippine Branch, for exemption from the Expanded Withholding Tax (EWT) under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94. cdta Documents submitted show that in its audited financial statements for the fiscal years ending March 31, 1994 and March 31, 1995, particularly its Statement of Income and Retained Earnings, it is indicated that Cable and Wireless PLC Philippine Branch had incurred net operating losses in the respective amounts of P1,612,512.00 and P87,574.000, respectively. 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) years. Such being the case, and since it has incurred net operating losses for two consecutive fiscal years from 1994 to 1995, it is exempt from the payment of the creditable withholding tax prescribed under Revenue Regulations No. 12-94 for the fiscal year 1996. (BIR Ruling No. UN-061-95 dated February 13, 1995, citing BIR Ruling No. 126-94 dated August 15, 1994) This ruling is 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)