BIR Ruling

August 10, 1967 Mr. Hadji Jainudin Nuo Field Officer, MDA-ICE Plant & Cold Storage Rio Hondo, Zamboanga City S i r : This refers to your letter dated March 29, 1967 stating the following: "This is to inform you that the MDA-ICE Plant and Cold Storage at Rio-Hondo, this City, will be ready for operation anytime next month. The Ice Plant has a maximum production of 40 tons a day and the 4 Cold Storage rooms have a capacity of 300 tons. During operation, the plant will sell ice to private sectors dealing with fish or meat and to the fishermen of this locality. It will also accept perishable goods for storage. cdti "Information in this connection is requested as to whether or not this plant, a project of the Mindanao Development Authority is required to secure permit from your Office prior to its operation. On the affirmative, please furnish us as soon as possible with the necessary forms to be accomplished so that necessary steps could be taken by this Office to abide with said requirements. "For your information and guidance, quoted hereunder is Section 12 of R.A. 3034, creating the Mindanao Development Authority, "Sec. 12. Exemption from tax. The Authority shall be exempt from all taxes incidental to its operations: Provided, That its subsidiary corporations shall be subject to all said taxes five years after their establishment under a gradual scale as follows: twenty per centum of all said taxes during the sixth year, forty per centum of all said taxes during the seventh year, sixty per centum of all said taxes during the eight year, eighty per centum of all said taxes during the ninth year, and one hundred per centum of all said taxes during the tenth year, after said establishment. Such exemption shall include any tax or fee imposed by the government on the sale, purchase or transfer of foreign exchange. All notes, bonds and debentures and other obligations issued by the Authority shall be exempt from all taxes, both as to principal and interest, except inheritance and gift taxes." In reply thereto, I have the honor to inform you that the MDA-ICE Plant and Cold Storage is not required to secure an internal revenue permit for the operation of its ice plant and cold storage business. As a subsidiary corporation of the MDA exempt from the payment of taxes for a period of five years from the date of their establishment, the registration of the business name and style and residence and business conducted by the ice plant and cold storage as prescribed by Section 203 of Tax Code need not also be complied with during said five-year period. However, after the termination of the five-year period of exemption, the ice plant and cold storage should secure the corresponding privilege tax-receipts on its businesses and within 10 days thereafter register as aforesaid with the collection agent of the locality where it is doing business. It may further be stated in this connection that after the five-year period of full exemption, the ice-plant and cold storage shall be subject to the fixed taxes as manufacturer and contractor and to the percentage taxes on its sales and gross receipts prescribed by Sections 182(A) (1), 186, and 191 of the Tax Code. It shall further be subject to the income and residence taxes. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue