BIR Ruling [DA-086-02]

May 2, 2002 BIR RULING [DA-086-02] RR 2-98 20-95 Hybrid Rice Seed Enterprises Research Center, Barangay Cogong Sta. Cruz, Laguna Attention: Ms. Gloria Abellanosa Accounting Manager Gentlemen : This refers to your letter dated September 28, 2001 requesting exemption from the payment of withholding tax. It is represented that Hybrid Rice Seed Enterprises is a division of SL Agritech Corporation; that SL Agritech Corporation is a BOI-registered establishment which produces hybrid rice seeds; that in the course of your operations, you need to import fertilizers and at the same time, sell the same fertilizers to Philippine Rice Research Institute (Philrice); that in your transaction with Philrice, they withheld tax in their payment to you; and that as a registered BOI company, you were given income tax holiday as provided for under Section 5 of the Specific Terms and Conditions accompanying your terms of Registration which provides, viz : 5. The enterprise shall be entitled to the following incentives: a. Income Tax Holiday (ITH) for six (6) years from June 2001 or from actual start of commercial operation whichever comes first but in no case earlier than the date of registration. Date of Filing: Within one (1) month from filing of ITR with BIR. For companies which filed tentative ITR the filing of the application shall be done within one (1) month after the lapse of the 2-year period within which to file the final ITR. In reply, please be informed that under Section 2.57.5(B)(2) of Revenue Regulations No. 2-98, implementing Section 57(B) of the Tax Code of 1997, the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investments Code of 1987. Accordingly, since SL Agritech Corporation is a BOI-Registered enterprise enjoying exemption from payment of income taxes pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987, for a period of six (6) years reckoned from June 2001 or from actual start of commercial operation whichever comes first but in no case earlier than the date of registration, this Office is of the opinion, as it hereby holds, that it is exempt from the payment of creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, on income payments received by it during the aforementioned period. ( BIR Ruling No. 020-95 dated February 13, 1995 ) 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. IcAaEH Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group