BIR Ruling [DA-049-03]

February 20, 2003 BIR RULING [DA-049-03] RR 1-95; RR 16-99 023-00 SGV & Co. 6760 Ayala Avenue 1226 Makati City Attention: Atty. M.F.A. Balili Tax Division Gentlemen : This refers to your letter dated September 20, 2002 on behalf of your client L&T International Group Phils., Inc., (L&T), requesting for a confirmation of your opinion that Revenue Regulations No. 1-95, as amended by RR No. 16-99, relative to the tax incentives granted to regional enterprises registered in the Subic Special Economic and Free Port Zone (SSEFPZ) will also be applicable to your client upon its registration as a regional enterprise in the Clark Special Economic Zone (CSEZ). It is represented that L&T is a domestic corporation duly organized and existing under the laws of the Philippines with office address at Bldg. 7500 A. Bonifacio corner J. Tinsay Street Clarkfield, Angeles City, Pampanga; that L&T is duly registered as a CSEZ enterprise; that L&T further intends to convert its current registration into a regional enterprise in CSEZ to engage in regional and/or international services, by providing services, such as but not limited to contract manufacturing arrangements, primarily to its affiliated companies in the Asia-Pacific Region; and that under RR 1-95, as amended by RR 16-99, regional enterprises registered with SSEFPZ shall be entitled to additional deductions of expenses not available to regular enterprises registered with the zone for purposes of computing the gross income subject to the 5% income tax. In reply, please be informed that Section 5 of Executive Order No. 80, Authorizing the Establishment of the Clark Development Corporation as the Implementing Arm of the Bases Conversion and Development Authority for the Clark Special Economic Zone provides, viz. : cSIHCA "Section 5. Investment Climate in the CSEZ . . . . Among other, the CSEZ shall have all the applicable incentives in the Subic Special Economic and Free Port Zone under R.A. 7227 and those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and the new investments laws which may hereinafter be enacted. xxx xxx xxx" Thus, all the applicable incentives in the SSEFPZ and in other export processing zones are likewise applicable to CSEZ in the same way that in BIR Ruling No. 023-00 dated May 18, 2000, tax incentives granted to SSEFPZ were likewise granted to Poro Point Special Economic and Freeport Zone. 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal Service