BIR Ruling

September 8, 1970 Delta Equipment & Parts, Inc. 2278 Espaa St., Manila Attention: Mr . Alfredo Q . Dunca Comptroller Gentlemen : This refers to your letter dated August 6, 1970, stating the following: "One of our suppliers from Taipei, Taiwan, Republic of China just recently made a proposal to set-up a plant for rubber products here in our country. cdt Hereunder are questions we would like to know, should this joint venture may prosper: 1. What are the present legal regulations for a new Plant for Rubber Products (with emphasis on Rubber Reinforced Suction Hoses) with a joint capital of Philippines (60%) and Republic of China (40%)? 2. What taxes could be exempted for a new plant of jointed capitals between Philippines and Republic of China? If so, how many years would be allowed? 3. What taxes should be paid by new plant of jointed capitals, say 5 or more years after its establishment? 4. Are we to understand that all new machineries, accessories and parts made in Taiwan for this new Rubber Products Plant could be imported into the Philippines Free from import duties ?" In reply, I have the honor to inform you as follows: 1. As this Office is concerned only with the collection of all national revenue taxes, it is not in a position to properly inform you as to the present legal regulations governing the establishment of new rubber products plants. 2. Under the proposed set-up, the new rubber products plant will be subject to all internal revenue taxes provided for in the Tax Code on manufacturers. 3. The Plant will be subject to the fixed and percentage taxes the moment it starts its operations. 4. The new machineries, accessories and parts to be imported from Taiwan for use in the operation of the Rubber Products Plant will be subject to the compensating taxes imposed under Section 190 of the Tax Code. In this connection, you are advised to pose your query on import duties to the Commissioner of Customs. aisadc Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue