BIR Ruling [DA-072-98]

March 11, 1998 BIR RULING [DA-072-98] Manila Water Company, Inc. 3rd Floor Administration Building Katipunan Road, Balara, Quezon City Attention: Mr . Armani R . Santos Manager, Accounting Department Gentlemen : This refers to your letter dated January 9, 1998 requesting for a Certificate of Exemption from the payment of creditable expanded withholding tax prescribed under Revenue Regulations No. 12-94 on account of your registration with the Board of Investment (BOI) under Executive Order No. 226, otherwise known as the "Omnibus Investments Code of 1987." LLphil It is represented that Manila Water Company, Inc. is registered with the BOI as a new operator of water supply and sewerage system for the East Zone Service Area with a pioneer status, under Certificate of Registration No. 97-188 dated August 20, 1997; and that your are entitled to an Income Tax Holiday for six (6) years pursuant to No. 4(a) of the Specific Terms and Conditions accompanying your Certificate of Registration, viz: "4. The enterprise shall be entitled to the following incentives: a. Income Tax Holiday (ITH) for six (6) years from August 1997 or from actual start of commercial operation, whichever comes first but in no case earlier than the date of registration." 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. As a BOI-registered enterprise, you are enjoying exemption from payment of income taxes pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987. Such being the case, the income payments made to you by local suppliers of goods shall not be subject to 1% expanded creditable withholding tax prescribed in Revenue Regulations No. 12-94. (BIR Rulings No. 163-94 dated December 2, 1994; UN 339-94 dated December 6, 1994) This ruling is 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 from the date of issuance. cdtech Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)