BIR Ruling [DA-268-99]

May 5, 1999 BIR RULING [DA-268-99] Mivan Philippines Mivan Builders Philippines, Inc. Unit 1707 Herrera Tower 98 Herrera Corner Valero Streets Salcedo Village Makati City Attention: Mr. Randy Pamintuan Accounting Manager Gentlemen : This refers to your undated letter requesting for abatement of penalties imposed under Section 204 of the Tax Code of 1997. It is represented that your company is engaged in the construction industry which was severely affected by the fallout of the Asian financial crises; that due to the crisis, your company is currently experiencing a severe cash flow problem, which is the reason why you were unable to meet the tax payment deadline last April 15, 1999; that currently, the company has no existing projects that can provide internal liquidity to find your overhead expenses and provide for the payment of your 1998 corporate income tax; that even the income position of your company for 1998 is due to the company's receivable from its last and only project; that this amounts only to paper income as of date because the receivable is currently in the process of arbitration and its settlement will take time; that your company has no recourse but to secure funding from its foreign stockholders to finance its operations until its cash flow improves in the near future; that due to this predicament, your company attempted futilely to secure funds from local sources to pay for its 1998 taxes; that it had no choice but to secure assistance from its foreign partner, Mivan Limited of the United Kingdom, as late as 3 days before the filing deadline; that the transfer of funds however will result in delay due to the lag time in processing wire transfers; and that normally, it takes one to two weeks but you have confirmed that the payment will be available for your use on the 23rd of April 1999 as the latest. In reply, please be informed that based on the foregoing facts and documents presented, and finding the reasons to be meritorious, this Office accepts your offer to pay 100% of your basic corporate income tax without the 25% surcharge but subject to 20% interest per annum computed up to date of payment pursuant to Section 249(B) in relation to Section 204(A)(1) of the Tax Code of 1997. TAEcCS However, this will not constitute a waiver of our right to investigate the income tax return you will file and assess and collect the corresponding deficiency taxes, inclusive of the statutory penalties that may still be found due from it. (BIR Ruling No. DA-076-96 dated February 20, 1996) Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue