BIR Ruling [DA-231-02]

December 3, 2002 BIR RULING [DA-231-02] RR 2-98 UN-163-94 Fluor Daniel, Inc. Phils . Asian Star Bldg., ASEAN Drive Filinvest Corporate City, Alabang 1780 Muntinlupa City Attention: Mr. Ramon M. Villaflores Gentlemen : This refers to your letter dated May 18, 2001 requesting for exemption from the payment of creditable withholding tax, on income payments made to you as New Service Exporter in the field of Engineering Design and Construction Services/Global Execution on a Pioneer Status under the Omnibus Investment Code of 1987 (E.O. 226), pursuant to Revenue Regulations No. 2-98, as amended. Documents submitted show that you are a BOI-registered enterprise existing under Certificate of Registration No. SE 2000-102 dated August 28, 2000 as a new Service Exporter in the field of Engineering Design and Construction Services/Global Execution on a pioneer status; that as a BOI-registered enterprise, you are enjoying income tax holiday for six (6) years from July 2000 or from actual start of commercial operation, whichever comes first; and that you started commercial operations in July 2000. In reply, please be informed that Sec. 2.57.5 (B)(2) of Revenue Regulations No. 2-98, as amended, provides that the withholding tax therein prescribed shall not apply to income payments made to corporations registered with the BOI and enjoying exemption from the payment of income taxes pursuant to the provisions of the Omnibus Investment Code of 1987, as amended. Considering that you are a corporation registered with the BOI and enjoying exemption from the payment of income taxes pursuant to the provisions of Article 39 (a)(1) of the Omnibus Investment Code of 1987 until July 2006, the income payments made to you pursuant to your BOI-registered activities, during the ITH period shall not be subject to creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended. ( BIR Rulings No. 163-94 dated December 2, 1994 and UN 339-94 dated December 6, 1994 ) However, the salaries paid to your employees is subject to withholding taxes pursuant to Sec. 57 in relation with Sec. 32(A)(1), both of the Tax Code of 1997. aCHDST 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.) EDMUNDO P. GUEVARA Deputy Commissioner (Legal and Inspection Group)