BIR Ruling [DA-082-04]

March 1, 2004 BIR RULING [DA-082-04] 57 (b); DA-60-2002 & 300-2003 Total (Philippines) Corporation 31/F ExpectAncy Plaza corner Sen. Gil Puyat Sr. & Don Chino Roces Avenues 1200 Makati City Attention: Mr. Christophe Dupeyron Vice-President, Finance & Administration Gentlemen : This refers to your letter dated October 20, 2003, requesting for confirmation of your opinion that Total (Philippines) Corporation ("TOTAL") is exempt from the payment of income tax on the sale of fuels and consequently from creditable expanded withholding tax on income payments received as prescribed under Revenue Regulations No. 12-94 implementing Section 57(b) of the Tax Code, as amended. It is represented that TOTAL is a domestic corporation registered with the Board of Investments (BOI) as New Industry Participant for Storage, Marketing and Distribution of Petroleum Products on a Pioneer Status under E.O. 226 ("Omnibus Investments Code of 1987"); that TOTAL was granted certain incentives, among others, an Income Tax Holiday (ITH) on the following registered projects, to wit: 1. Certificate of Registration No. : 99-100 Bataan Fuels Depot Facilities Location of Registered Activities : Barangay Alas-Asin, Mariveles, Bataan Coverage of Registration : 7 Storage Tanks for Petroleum Products Date of Registration : November 29, 1999 ITH Reckoning period : January 2001 Duration of ITH Availment : 2001 up to 2005 2. Certificate of Registration No. : 2002-045 Bataan Fuels Depot Expansion Project Location of Registered Activities : Mariveles, Bataan Coverage of Registration : 3 Storage Tanks for Petroleum Project Expansion Project Date of Registration : March 13, 2002 ITH Reckoning Period : April, 2003 Duration of ITH Availment : April 2003 up to April 2008 3. Certificate of Registration No. : 2002-044 Manila Depot Fuels Depot Facilities Location of Registered Activities : North Harbor, Tondo, Manila Coverage of Registration : 10 Storage Tanks for Petroleum Products Date of Registration : March 13, 2002 ITH Reckoning period : May, 2003 Duration of ITH Availment : May, 2003 up to May, 2008 and that the incentive availment of ITH is limited for five (5) years without extension reckoned from date of forecasted start of operation or from actual start of commercial operation whichever comes first but not earlier than date of registration subject to the imposition of a cap/and or base figure and shall be applied on the basis of consolidated annual sales generated by all registered projects of TFEPhils. to determine the ITH incentives in the year of availment. TDCAIS In reply, please be informed that Section 2.57.5(B)(2) of Revenue Regulations (Rev. Regs.) No. 2-98, as amended by Rev. Regs. No. 6-2001, and as further amended by Rev. Regs. No. 17-2003 implementing Section 57(B) of the Tax Code of 1997, provides that the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from income tax pursuant to the provisions of Republic Act No. 7916 and the Omnibus Investments Code of 1987. Considering therefore, that TOTAL is a BOI-registered enterprise enjoying ITH for a period of five (5) years reckoned from the dates specified in its registered projects as indicated above, pursuant to the provisions of Section 39(a)(1) of E.O. 226, this Office is of the opinion as it hereby holds that it is exempt from the payment of creditable withholding tax prescribed in Rev. Regs. No. 2-98, as amended by Rev. Regs. Nos. 6-2001 and 17-2003 on income payments received by it during the ITH periods as indicated above, in connection with its registered activity. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group