BIR Ruling [DA-051-96]

February 2, 1996 BIR RULING [DA-051-96] Finetex Spinning Mills, Inc. Rm. 3A-37 Damar Loop, Damar Village Balintawak, Quezon City Attention: Mr . Cheung Che Man President Gentlemen : This refers to your letters dated March 13 and September 3, 1995 requesting exemption from the 1% creditable withholding tax on the income payments made to you by your customers on their local purchase of spun yarn. It is represented that you are registered on July 18, 1990 with the Board of Investments as a New Producer of spun cotton yarn and spun polyester cotton yarn on a Non-Pioneer Status under the Omnibus Investments Code of 1987 under Certificate of Registration No. EP 90-379; and that you are entitled to an income tax holiday for four (4) years from January 1992 or from the actual start of your commercial operations. cdtech In reply thereto, 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 Investments Code of 1987, as amended. Accordingly, as a local supplier of spun cotton yarn and spun polyester cotton yarn, you are exempt from the creditable expanded withholding tax of 1% prescribed under Section 1 (n) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94 on income payments received from any of the top 5,000 corporations. (BIR Ruling No. 163-94). Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)