BIR Ruling [DA-034-98]

February 3, 1998 BIR RULING [DA-034-98] Punongbayan & Araullo 6th Floor, Vernida IV Bldg. Alfaro St., Salcedo Village Makati City Attention: Atty . Vic C . Mamalateo Tax Partner Gentlemen : This refers to your letter dated October 23, 1997 requesting on behalf of your client, Van Leer Philippines, Inc ., for issuance of a certificate of tax exemption from the creditable expanded withholding tax of 1% on income payments made to you as a local supplier of goods. LLpr Documents submitted show that Van Leer Philippines, Inc. is a BOI registered enterprise and a holder of Certificate of Registration No. 96-120 dated July 12, 1996; that it started commercial operations on July 1997; that it was granted an Income Tax Holiday for a period of four (4) years to commence from July 1997 or from actual start of commercial operations, whichever comes first, but in no case earlier than the date of registration; and that it is a corporation engaged in the business of manufacturing industry and commercial packaging products. In reply, please be informed that Section 4 (b)(2) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, provides that the withholding tax therein prescribed shall not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of the Omnibus Investment Code of 1987, as amended. Since your client, Van Leer Philippines, Inc., enjoys exemption from income tax for four (4) years to commence from July 1997 or from the actual start of commercial operations, whichever comes first, pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987, the income payments made to it as a local supplier of packaging products shall not be subject to 1% expanded creditable withholding tax prescribed under Revenue Regulations No. 12-94 during the said period. (BIR Ruling No. 163-94 dated December 2, 1994) cdta Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)