BIR Ruling [DA-038-04]

February 4, 2004 BIR RULING [DA-038-04] Section 109 (p) 053-2000 Atty. F.D. Nicolas B. Pichay 26 Floor Pacific Star Bldg. Sen. Gil Puyat Avenue cor. Makati Avenue, Makati City S i r : This refers to your letter dated October 06, 2003 requesting in behalf of your client, Pacific Business Group for a certificate of exemption from the value added tax pursuant to the provisions of Republic Act No. 8756. It is represented that Pacific Business Group (PBG) is a registered Regional Headquarters of the Pacific Business Group (Hong Kong); that a PBG Regional Headquarters was established in the Philippines and is duly registered and licensed by the Securities and Exchange Commission under Certificate of Registration No. A200108005 dated June 07, 2001; that a copy of the said registration is attached herein as Annex "A"; that the services rendered are merely supervisory, and only functions as a communications and coordinating center for the mother company's affiliates in the Asia-Pacific Region; and that PBG does not earn income from the Philippines. In reply, please be informed that services rendered by regional or area headquarters established in the Philippines by multinational companies which act as supervisory, communications and coordinating center for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive income from the Philippines are exempted from the value-added tax pursuant to Section 109(p) of the Tax Code of 1997 and also Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1997. CDHcaS Accordingly, being a Regional Headquarters in the Philippines of Pacific Business Group (Hong Kong), PBG shall be exempt from VAT provided that it merely acts as a supervisory, communications and coordinating center for its affiliates, subsidiaries or branches in the Asia-Pacific Region and provided further that it does not earn or derive income from the Philippines. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group