BIR Ruling [DA-093-00]

February 10, 2000 BIR RULING [DA-093-00] Sycip Gorres Velayo & Co . 6760 Ayala Avenue 1226 Makati City Attention: Atty . Ma . Fides A . Balili Gentlemen : This refers to your letter dated November 11, 1999 requesting in behalf of your client, Cebu Light Industrial Park, Inc. (CLIP) for a confirmation of your opinion that the rental payments to be made to CLIP by its lessees are exempt from the 5% expanded withholding tax pursuant to Section 2.57.5(B) of Revenue Regulations No. 2-98. It is represented that CLIP is a corporation duly existing and registered with under the laws of the Philippines; that it is also registered with the Board of Investments under Certificate of Registration No. 97-140 as a new operator of an industrial estates located in Cebu consisting of 63 hectares; that as such operator, CLIP leases out lots and facilities to locators in the industrial parks and that as a BOI-registered enterprise, CLIP is entitled to an income tax holiday pursuant to No. 5(a) of the Specific Terms and Conditions accompanying its certificate of registration which provides, viz: "5. The enterprise shall be entitled to the following incentives: a. Income Tax Holiday (ITH) for four (4) years from October 1997 or 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 the final ITR with BIR." LexLib 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 made to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law (general or special) like the Omnibus Investments Code of 1987. Accordingly, since CLIP is a BOI-registered enterprise, enjoying exemption from payment of income taxes pursuant to the provisions of Section 39(a)(1) of the Omnibus Investment Code of 1987, income payments made to CLIP by its lessees shall not be subject to the 5% expanded withholding tax on rentals prescribed in Revenue Regulations No. 2-98. (BIR Ruling No. DA-349-99 dated June 16, 1999) 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.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group