BIR Ruling [DA-183-05]

April 20, 2005 BIR RULING [DA-183-05] 57 (B); DA362-98 OMED Zamboanga Corporation 1st Floor, ZFA Admin Bldg., San Ramon Zamboanga City Attention: Mr. Prabakhar P. Selvam Manager-Operations Gentlemen : This refers to your letter dated September 24, 2004 stating that OMED Zamboanga Corporation is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CS200307200 dated March 24, 2003; that it is likewise registered both with the Zamboanga City Special Economic Zone Authority and Freeport Enterprise (ZAMBOECOZONE) under R.A. No. 7903, otherwise known as the Law Creating a Special Economic Zone and Freeport in the City of Zamboanga which provides that all ZAMBOECOZONE enterprises shall pay a final tax of five percent (5%) of gross income earned as provided in Section 4(f) of the said Act; and the BIR under Certificate of Registration No. OCN 03-930-001972V dated August 8, 2003; and that it is engaged in the business related to Information Technology particularly software development. Based on the foregoing representations, you now request for the issuance of a Certificate of Exemption from the creditable withholding tax on income payments made to Omed Zamboanga Corporation. In reply thereto, please be informed that Section 2.57.5(B) of Revenue Regulations No. 2-98, as amended, is explicit in its provisions that the expanded withholding tax does not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. R.A. No. 7903 grants ZAMBOECOZONE specific income tax exemption under Section 4(f) of the said Act which provides that in lieu of all taxes, all ZAMBOECOZONE shall pay a final tax of five percent (5%) based on their gross income earned. SEHaDI SUCH BEING THE CASE, since OMED Zamboanga Corporation is an ECOZONE enterprise registered under R.A. No. 7903, it is exempt from the creditable withholding tax on income payments received for the sale of its services. 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, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group