BIR Ruling [DA-036-99]

January 20, 1999 BIR RULING [DA-036-99] Subic Bay Metropolitan Authority SBMA Office Building 229, Rm. 214 Subic Bay Freeport Zone Attention: Mr . Antonio Rex Chan Chief Operating Officer Gentlemen : This refers to your letters dated October 5 and 15, 1998 requesting for the urgent resolution of the following issues, in view of the action taken by our Revenue District Officer Edilberto M. Carlos, RDO No. 19, Subic Freeport Zone: LLjur 1. Whether the SUBIC BAY METROPOLITAN AUTHORITY (SBMA) is subject to corporate income tax for the year 1998 at the rate of 34%, based on its taxable income; and 2. Whether the SBMA's rental income from lease of real property to SBMA enterprises is subject to the 5% creditable expanded withholding tax. In reply, please be informed that Section 27(C) of the National Internal Revenue Code, as amended by R.A. No. 8424, otherwise known as the National Internal Revenue Code of 1997, effective January 1, 1998, provides: "(C) Government-owned or Controlled Corporations, Agencies or Instrumentalities . The provisions of existing special or general laws to the contrary notwithstanding, all corporations, agencies, or instrumentalities owned or controlled by the Government, except the Government Service Insurance System (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PIHC), the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR), shall pay such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in a similar business, industry, or activity." In view thereof, this Office hereby confirms that the action taken by our Revenue District Officer Edilberto M. Carlos, RDO No. 19, Subic Freeport Zone, in his letter to Olongapo Food Corporation, an SBMA-registered enterprise, a copy of which was furnished in your letter of October 15, 1998, is correct and in conformity with the aforementioned law and regulations. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue