BIR Ruling No. 415-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Section 32(B)(7)(a),NIRC

BIR Ruling No.1106-2018

OT-0415-2020

JUL 2 4 2020

CASTILLO LAMAN TAN PANTALEON & SAN JOSE

2nd -5th Floors, The Valero Tower 122 Valero St., Salcedo Village, Makati City

Attention: Louie Alfred G. Pantoni

Gentlemen:

This refers to your request for confirmation that the interest income of Infraco Asia

Luzon Hydro Pte. Ltd. ("InfraCo Hydro") from its loan transaction with Alternergy Mini Hydro

Corporation ("Alternergy") as described below, as well as InfraCo Hydro's income from

investments in other loans, stocks, bonds or other domestics securities, and deposits in

Philippine banks, is exempt from Philippine income tax and withholding thereof pursuant to

Section 32(B)(7)(a) of the 1997 Tax Code, as amended.

Background:

InfraCo Hydro is a nonresident foreign company organized and existing under the laws

of Singapore, with Company Registration No. , having its registered office and

principal place of business at 10 Collyer Quay, #10-01 Ocean Financial Centre, Singapore 049315 and Level 18 Republic Plaza II, 9 Raffles Place, Singapore 048619, respectively. It is

registered as a non-taxable taxpayer with the Bureau of Internal Revenue (BIR) with Taxpayer

Identification Number (TIN . As a company engaged in development

infrastructure projects, InfraCo Hydro provides financing for the development of mini

hydropower plants in various areas in Luzon. InfraCo Hydro is not registered as a corporation or partnership in the Philippines as certified by the Securities and Exchange Commission (SEC) on August 2, 2016. It is a'wholly-owned subsidiary of InfraCo Asia Development Pte. Ltd.

("InfraCo Asia").

InfraCo Asia is a nonresident foreign company organized and registered under the laws

of Singapore, with Company Registration No. having its registered office and

049315 and Level 18 Republic Plaza II, 9 Raffles Place, Singapore 048619, respectively. Its principal place of business at 10 Collyer Quay, #10-01 Ocean Financial Centre, Singapore

principal purpose and mission is to provide financing for the development of infrastructure

opportunities and bring projects to the stage where they can attract domestic and international

private sector debt and equity finance, focusing on the poorer regions of South and Southeast Asia.

PIDG), a multi-donor arrangement aimed at facilitating the provision of infrastructure InfraCo Asia is wholly-owned by the Private Infrastructure`Development Group

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Infraco Asia Luzon Hydro Pte. Ltd. Page 2 of 3

needed to eliminate poverty in developing countries by encouraging private investment. PIDG is directed and funded. by its participating donors, consisting of (i) the World Bank Group, as namely, the United Kingdom, Switzerland, Netherlands, Germany, Sweden, Australia, and represented by the International Finance Corporation ("IFC"), and (ii) foreign governments,

Norway,' IFC is an international organization established by the Articles of Agreement among its member countries including the Republic of the Philippines. The ownership, funding and

operation of InfraCo Asia are governed by the Amended and Restated Agreement between InfraCo Asia Development Pte. Ltd and its Funders and Shareholders in relation to the Funding

and Operation of Infraco Asia Development Pte. Ltd. dated July 22, 2015, as amended.

controlled, and financed by foreign governments. by the governments of the United Kingdom (through its Department for International Development), Switzerland (through the Swiss State Federal Department of Economic Affairs, Education and Research), and Australia (through its Department of Foreign Affairs and Trade) pursuant to the Amended and Restated Funders' Agreement dated July 22, 2015, as amended. In view of its ownership structure, InfraCo Asia is a financing institution ultimately owned, latter's issued shares, through the trustees -- SG Hambros Trut Company Ltd., Multiconsult Trustees Ltd., and Minimax Ltd. At present, the operations of InfraCo Asia are entirely funded PIDG owns ordinary shares of InfraCo Asia, constituting 100% of the

Cities Building, 110 Legazpi Street, Legaspi Village, Makati City, Philippines, with TIN Alternergy is a domestic corporation with principal office address at Level 6, Twin It is primarily engaged in the business of developing renewable energy.

Corporation, as Covenantor. Under the CLA, InfraCo Hydro agreed to make an investment in Agreement (CLA") with Alternergy, as Borrower, and Altenergy Hydro Partners Alternergy in the form of convertible loans in the aggregate principal amount of up to US$ On April 28, 2016, InfraCo Hydro, as lender, entered into a Convertible Loan , subject to the terms and conditions set forth in the CLA.

Based on the foregoing, you request confirmation on the following:

1. That the interest income to be received by InfraCo Hydro from Alternergy pursuant to the CLA is exempt from the 20% final withholding tax pursuant to Section 32(B)(7)(a) of the 1997 Tax Code, as amended; and

2.That any income derived by InfraCo Hydro from investments in the Philippines in other loans, stocks, bonds or other domestics securities, or from interest on withholding thereof pursuant to Section 32(B)(7)(a) of the Tax Code, as deposit in banks in the Philippines is exempt from income tax and the amended.

banks in the Philippines is exempt from income tax and the withholding thereof pursuant to section 32(B)(7)(a) of the Tax Code, which states: and ultimately owned, controlled, or financed by foreign governments, its income from investments in loans, stocks, bonds or other domestic securities, or from interest on deposit in In reply, please be informed that since InfraCo Asia is a financing institution entirely

2015,respectively. ' Excluding Austria and Ireland which cancelled their membership from PIDG on July 16, 2014 and March 26.

Infraco Asia Luzon Hydro Pte. Ltd. Page 3 of 3 OT-0415-2020 JUL 2 4 2020

"SEC.32. Gross Income.-

XXX XXX XXX

(B Exclusions from Gross Income. -- The following items shall not be included in gross income and shall be exempt from taxation under this Title:

XXX XXX XXX

Miscellaneous Items.-

(a financing institutions owned, controlled, or enjoying refinancing from foreign governments; and (ii) international Income Derived by Foreign Government.- Income derived or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments, (ii) or regional financial institutions established by foreign governments." from investments in the Philippines in loans, stocks, bonds

Securities, or from interest on deposits in loans, stocks, bonds, or other domestic securities, or consequently, from the withholding tax. (BIR Ruling No. 1106-18 dated July 24, 2018) owned by InfraCo Asia, which is a financing institution entirely and ultimately owned, controlled and financed by foreign governments, particularly the governments of the United CLA. Similarly, InfraCo Hydro's income investments in loans, stock, bonds or other domestic from interest on deposits in banks in the Philippines are also exempt from income tax and, from income tax and consequently from withholding tax because InfraCo Hydro is wholly- Swiss State Federal Department of Economic Affairs, Education and Research ), and Australia (through its Department of Foreign Affairs and Trade). As such, Alternergy is not required to withhold any income tax on interest income earned by or due to InfraCo Hydro pursuant to the Kingdom (through its Department for International Development), Switzerland (through the In view of the foregoing, InfraCo Hydro's interest income from Alternergy is exempt

if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours,

Commissioner of Internal Revenue 1a3aa CAESAR R. DULAY

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