BIR Ruling [DA-208-00]

April 4, 2000 BIR RULING [DA-208-00] RR 2-98 DA-016-99 Philippine HKR Inc . Toyota, Sta. Rosa (Laguna) Complex Barangay Pulong, Sta. Cruz Sta. Rosa, Laguna Attention: Ryuzo Miwa EVP/Treasurer Gentlemen : This refers to your letter dated June 11, 1999 requesting exemption from the creditable withholding tax pursuant to Revenue Regulations No. 2-98. It is represented that Philippine HKR Inc. is registered with the Philippine Economic Zone Authority on October 24, 1196 under Certificate of Registration No. 96-111; that you are engaged in the manufacture and sale of Gear Bush and Universal Joint; that you started you commercial operation on August 25, 1997; that pending approval of your application for pioneer status and until PEZA approved the 6-year Income Tax Holiday, you were already availing the 4-year income tax holiday from the start of your commercial operation, as provided for under Article 13 of your Registration Agreement with PEZA; that the income tax holiday for sales income from your initial product line commenced on August 25, 1997 to August 25, 2001; that for your second product line, your income tax holiday commenced on September, 1998 to September 2002; that pursuant to your registration agreement with PEZA, the percentage of production required for export is 70% to 90% of your total production; and that as an Ecozone Export Enterprise, you are enjoying tax incentives under Book IV of Executive Order No. 226 in relation to Sec. 6, Par. A of Rule XV of the Rules and Regulations to implement RA 7916. cdlex In reply, please be informed that Section 2.57.5(B)(2) of Revenue Regulations No. 2-98 provides that income payments to "corporations registered with the Board of Investments and enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investment Code of 1987" shall be exempt from the creditable withholding tax. Such being the case, income payments to Philippine HKR Inc. shall be exempt from the creditable withholding tax under Revenue Regulations No. 2-98, implementing Section 57(B) of the Tax Code of 1997. (BIR Ruling No. DA-016-99 dated January 11, 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. LibLex Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)