Request of Symmetry Philippines, Inc. for the suspension of the imposition of the Minimum Corporate Income Tax

September 07, 2001 BIR RULING [DA-157-01] MEMORANDUM FOR : Sec. Jose Isidro N. Camacho Department of Finance FROM : Com. Rene G. Baez Bureau of Internal Revenue SUBJECT : Request of Symmetry Philippines, Inc. for the suspension of the imposition of the Minimum Corporate Income Tax (MCIT) This refers to the letter of DeGuzman & Celis Law Office dated April 3, 2001 requesting for the suspension of the imposition of the Minimum Corporate Income Tax (MCIT) of its client, Symmetry Philippines, Inc., due to business reverses pursuant to Section 27(E)(3) of the Tax Code of 1997, as implemented by Revenue Regulations No. 9-98. It is represented that for the years ended December 31, 1999 and 2000, Symmetry Philippines, Inc. sustained net losses from operations; that in 1999, its net loss was P5,015,662, and in the year 2000, its losses had increased to P24,425,532; that the company had suffered business reverses because of the economic condition in the country primarily the foreign exchange situation as a result of the deterioration of the Philippine peso; that the company's products consist of food supplements which are imported, thus the cost of goods have been escalating due to the foreign exchange situation; that furthermore, sales for the said taxable years have dropped because the prices of the goods increased while the customers purchasing power had tremendously dropped; that the financial condition of Symmetry Philippines, Inc. fully justifies the suspension of the MCIT for the year 2000; and that in support of its request, DeGuzman & Celis Law Office submitted to this Office the audited financial statement of Symmetry Philippines, Inc. for the year ended December 31, 2000. Section 27(E)(3) of the Tax Code of 1997, as implemented by Revenue Regulations No. 9-98, provides that the Secretary of Finance is hereby authorized to suspend the imposition of the minimum corporate income tax on any corporation which suffered substantial losses on account of prolonged labor dispute or because of force majeure , or because of legitimate business reverses. The term "Legitimate Business Reverses" shall include substantial losses sustained due to fire, robbery, theft or embezzlement, or for other economic reason as determined by the Secretary of Finance. (Sec. 2.27(E)(4)(d), Revenue Regulations No. 9-98) In view of the foregoing, it is respectfully recommended that the request of DeGuzman &; Celis Law Office for the suspension of the imposition of the MCIT on its client, Symmetry Philippines, Inc., on account of continuing losses due to rapid deterioration of the value of the Philippine peso and its customers' purchasing power be granted for the taxable year 2000. (SGD.) RENE G. BAEZ Commissioner of Internal Revenue APPROVED: (SGD.) JOSE ISIDRO N. CAMACHO Secretary of Finance