BIR Ruling [DA-234-00]

May 17, 2000 BIR RULING [DA-234-00] RA 7916 DA-418-98 DA-234-2000 Panorama Development Corp. 1029 E. delos Santos Avenue Quezon City Attention: Ms . Cristina M . Cabasag Accounting Manager Gentlemen : This refers to your amended letter dated December 6, 1999 requesting in effect for a ruling that Panorama Property Ventures, Inc. (formerly Panorama Development Corporation), a PEZA-registered enterprise is exempt from the 5% withholding tax on rental income from lease of real property. It is represented that Panorama Property Ventures, Inc. (PPVI) leases its buildings located at First Cavite Industrial Estate (FCIE) Special Economic Zone; and Laguna International Industrial Park (LIIP) that the ruling from this Office will be furnished to your FCIE and LIIP tenants to be used by the latter as their basis for not subjecting PPVI to the 5% withholding tax on its rental income. cdlex In reply, please be informed that Section 4(b)(2) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94 and as further amended by Section 2.57.5(B) of Revenue Regulations No. 2-98 implementing Section 57(B) of the Tax Code of 1997, the withholding tax prescribed in these regulations shall not apply to income payment to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. In connection therewith, under Section 24 of Republic Act (R.A.) No. 7916, otherwise known as the Special Economic Zone Act of 1995, no taxes, local or national, shall be imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses or enterprises within the ECOZONE shall be remitted to the National Government. Such being the case, and since you are a registered ECOZONE Export Enterprise enjoying income tax exemption, among others, pursuant to the provisions of Section 24 of R.A. No. 7916, your income payments from lease of real property are exempt from the payment of the creditable expanded withholding tax imposed under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, as last amended by Revenue Regulations No. 2-98, pursuant to Section 4(b) of the same regulations. (BIR Ruling No. DA-418-98 dated September 14, 1998) 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. llcd Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service