Filpride Resources Inc.

April 24, 2008 BIR RULING [DA-267-08] Sec. 57 (B); RR 2-98; DA 400-06 Filpride Resources Inc. West Gate Office Sampson Road, Central Business District, Subic Bay Freeport Zone Attention: Ms. Aniebeth S. Dionzon Chief Financial Officer Gentlemen : This refers to your letter dated April 17, 2008 requesting exemption from the creditable expanded withholding tax prescribed under Revenue Regulations No. 2-98, as amended. It is represented that Filpride Resources Inc. (Filpride) is a corporation duly organized and existing under and by virtue of Philippine laws with office address at West gate office, Sampson Road, Central Business District Office, Subic Bay Freeport Zone. It is engaged in the business of purchasing, selling, manufacturing, treating, producing, distilling, handling, distributing and dealing in petroleum, its products, by-products, compounds, derivatives and in other minerals, mineral substances and chemical substances. It is classified as a Subic Bay Freeport Enterprise as defined under Section 3, paragraph G of the Implementing Rules of the Subic Bay Metropolitan Authority (SBMA) and enjoys all the rights, privileges and benefits established under Republic Act (RA) 7227, among which, is the special tax regime of 5% of gross income earnings in lieu of all other taxes. Based on the foregoing representations, you now request exemption from the creditable expanded withholding tax prescribed under Revenue Regulations (Rev. Regs.) No. 2-98, as amended. In reply, please be informed that Section 2.57.5 (B) (2) of Rev. Regs. No. 2-98, as amended; states as follows: "SEC. 2.57.5. Exemption from Withholding. The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following: A) . . . B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following: (1) . . . (2) Corporations registered with the Board of Investments, Philippine Export Processing Zones and Subic Bay Metropolitan Authority, enjoying exemption from the income tax pursuant to EO 226, as amended, Republic Act 7916 the Omnibus Investment Code of 1987, and RA 7227, as amended, respectively; (3) . . . (4) . . . (5) . . ." As an SBMA-registered business establishment operating within the SFZ, Filpride is subject to the payment of preferential tax rate of 5%, in lieu of paying local and national taxes, based on its gross income earned within the SFZ and which shall be remitted in accordance with R.A. 7227, as amended. Accordingly, since you are exempt from payment of national and local taxes, and in lieu of which, you are subject to the 5% tax based on the gross income earned as defined under Rev. Regs. No. 2-05, this Office is of the opinion as it hereby holds that you are exempt from the creditable expanded withholding tax prescribed under Section 2.57.5 (B) of Revenue Regulations No. 2-98, as amended, implementing Section 57 (B) of the Tax Code of 1997 on income payments received by your company. 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service