BIR Ruling [DA-273-04]

May 17, 2004 BIR RULING [DA-273-04] 57 (B) DA189-2000 Adriot Innovations Philippines, Inc. 32/F LKG Tower, 6801 Ayala Avenue Makati City Attention: Ms. Ma. Gina B. Leria Admin. Advisor Gentlemen : This refers to your letter dated February 28, 2002 requesting for a tax exemption certificate on account of your registration with the Board of Investments (BOI) under Executive Order No. 226, otherwise known as the "Omnibus Investments Code of 1987." Documents submitted disclosed that Adroit Innovations Philippines, Inc. (Adriot) is duly registered with the BOI under Certificate of Registration No. 2001-033; that you are a new export IT service firm in the field of development of application software and other IT-related solutions with a non-pioneer status; and that you are entitled to an Income Tax Holiday for four (4) years pursuant to No. 6(a) of the Specific Terms and Conditions accompanying your Certificate of Registration, viz : "6. The enterprise shall be entitled to the following incentives: a. Income Tax Holiday (ITH) for a period of four (4) years from March 2001 or from the actual start of commercial operations, whichever comes first, but in no case earlier than the date of registration. Date of Filing: Within one (1) month from filing of final ITR with BIR In reply, please be informed that Section 2.57.5(B)(2) of Revenue Regulations No. 2-98, as amended, implementing Section 57(B) of the Tax Code of 1997, the withholding tax prescribed in the said Regulations shall not apply to income payments made to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law (general or special) like the Omnibus Investments Code of 1987. Accordingly, since Adriot is a BOI-registered enterprise enjoying exemption from payment of income taxes pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987, income payments made by its local suppliers of goods shall not be subject to 2% expanded creditable withholding tax prescribed in Revenue Regulations No. 2-98, as amended. ( BIR Ruling No. 189-2000 dated March 30, 2000 ) 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group