Anxa Limited

April 20, 2007 BIR RULING [DA-250-07] DA 364-04 Anxa Limited 1201-1204 South Center Tower Venture Street Madrigal Business Park Alabang, Muntinlupa City Attention: Ms. Bernadette G. Quiones Finance & Admin. Manager Gentlemen : This refers to your letters dated February 15, 2007 and January 26, 2007 stating that Anxa Limited (ANXA) is registered with the Securities and Exchange Commission (SEC) under SEC Registration No. A200116732 dated November 6, 2001 as a regional headquarter; that ANXA does not earn or derive income within the Philippines; that as coordinating, administration and communications center for its affiliates abroad, it incurs expenses and contract services of companies based in the Philippines; and that ANXA engages the service of internet providers, buy its office equipments and supplies, gets phone lines and leases its office spaces. In connection therewith, you now request a ruling that as Regional Headquarter it is not subject to value-added tax (VAT) since it does not derive any income except for the annual inward remittance by the Head Office considering that Section 64 of the Omnibus Investment Code, as amended by Republic Act (R.A.) No. 8756 and Section 4.109-1 (B) (j) of Revenue Regulations No. 16-2005, implementing R.A. No. 9337 exempt a Regional Headquarter. In reply thereto, please be informed that Section 4.109-1 (B) (j) of Revenue Regulations No. 16-2005 provides that services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia Pacific Region and do not earn or derive income from the Philippines, shall be exempt from VAT. In stressing the rationale of the above-mentioned rule, this Office elucidated the matter in BIR Ruling No. 047-01 dated September 28, 2001 and later reiterated in BIR Ruling No. DA364-04 dated June 28, 2004 , as follows: ". . . the activities of the proposed RHQ to be established by CAL shall be exempt from VAT pursuant to Section 109(p) of the Tax Code of 1997. . . ." Inasmuch as ANXA is a regional headquarter and does not earn or derive income from the Philippines but merely acts as coordinating, administration and communications center for its affiliates abroad, this Office holds that ANXA is exempt from VAT pursuant to Section 4.109-1 (B) (j) of Revenue Regulations No. 16-2005. ATEHDc 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service