PTT Philippine Trading Corporation

May 2, 2008 BIR RULING [DA-277-08] R.A. 9480; DO-29-07; RMC 69-07; DA-613-07; DA-012-08 PTT Philippine Trading Corporation Brand-Rex Compound, Argonaut Hi-way Boton Area, Subic Bay Freeport Zone Olongapo City Attention: Ms. Sukanya Seriyothin Chief Financial Officer Gentlemen : This refers to your letter dated March 17, 2008 requesting confirmation on the applicability of the provisions of Republic Act (R.A.) No. 9480, otherwise known as the Tax Amnesty Act of 2007, to excise taxes on imported petroleum products being collected by the Bureau of Customs (BOC) in its capacity as duly authorized collection agent of the Bureau of Internal Revenue (BIR). DaCTcA It is represented that PTT Philippines Trading Corporation ("PTT-PTC" for brevity) is engaged in the importation and sale of petroleum and other petroleum products while being a registered enterprise under the Subic Bay Metropolitan Authority (SBMA) and located within the Subic Bay Freeport Zone. As such, PTT-PTC is subject to the 5% preferential tax treatment on its gross income, in lieu of all taxes, pursuant to Sec. 12 (b) and (c) of R.A. 7227, as amended by R.A. 9400. On July 31, 2007, PTT-PTC was assessed by the BOC for deficiency excise tax and value-added tax (VAT) on its importation of petroleum and other petroleum products for the year 2004 to 2006. PTT-PTC recognizes the fact that the tax amnesty program covers only the years 2005 and prior years. Hence, it paid its liability for the deficiency excise tax and VAT for the taxable years 2004 and 2005 under the said tax amnesty program. aIcTCS From the foregoing, PTT-PTC is of the opinion that since it already paid its liability for the deficiency excise tax and VAT for the taxable years 2004 and 2005 under the tax amnesty program, it is immune already from the payment of said deficiency taxes and the corresponding penalty imposed therewith. In reply, please be informed that Section 3, Rule II of Department Order No. 29-07 (D.O. 29-07) or the Implementing Rules and Regulations of R.A. 9480 provides as follows: "SEC. 3. Taxes Covered. The tax amnesty shall cover all national internal revenue taxes imposed by the National Government for the taxable year 2005 and prior years, with or without assessments duly issued therefore, that have remained unpaid as of December 31, 2005." The kinds of taxes covered by the provisions of R.A. 9480 were clarified in Revenue Memorandum Circular No. 69-2007, dated November 5, 2007, pertinent portion of which states: "Q-1 What type of taxes and what taxable period/s are covered by the Tax Amnesty Program under R.A. 9 48 0 as implemented by D.O.29-07? A-1 The Tax Amnesty Program (TAP) covers all national internal revenue taxes such as income tax, estate tax, donor's tax and capital gains tax, value added tax, other percentage taxes, excise taxes and documentary stamp taxes, except withholding taxes and taxes passed on and already collected from the customers for remittance to the BIR, these taxes/funds being considered as funds held in trust for the government. . . ." (Emphasis supplied) It is clear from the foregoing that all national internal revenue taxes, with the exception of withholding taxes, are covered by the provisions of R.A. 9480. This includes excise taxes on imported articles imposed under Section 129 of the Tax Code of 1997, as amended, which are paid by the owner or importer to the BOC. Under R.A. 9480, it is of no moment where the taxes are paid or who collects such taxes. To fall within the coverage of the law, what is important is that the tax subject of availment is a national internal revenue tax. Inasmuch as excise taxes on imported petroleum products are national internal revenue taxes, they are covered by the provisions of R.A. 9480 notwithstanding that such taxes are paid at and collected by BOC. Such being the case, the immunities granted under Section 10 of the law, particularly the immunity from payment of taxes arising from failure to pay any and all internal revenue taxes for taxable year 2005 and prior years, shall be accorded to PTT-PTC subject to the condition that PTT-PTC fully complies with the provisions on availment under R.A. 9480. In this regard, paragraph 3, Section 6.3., Rule III of D.O. 29-07 provides that: "SEC. 6. Method of Availment of Tax Amnesty. . . . 1. . . . 2. . . . 3. . . . The Acceptance of Payment Form, the Notice of Availment, the SALN, and the Tax Amnesty Return shall be submitted to the RDO, which shall be received only after complete payment. The completion of these requirements shall be deemed full compliance with the provisions of R.A. 9 48 0." Considering that PTT-PTC has completed the requirements for availment of tax amnesty, it is deemed to have fully complied with the provisions of the law. Accordingly, it is entitled to the immunities and privileges under R.A. 9480. Hence, PTT-PTC shall be immune from the payment of excise tax and VAT due on imported petroleum and other petroleum products for taxable year 2004 and 2005 which taxes are being collected by BOC. Relative thereto, Section 10 of the D.O. 29-07 partly provides thus: "SEC. 10. Immunities and Privileges . Taxpayers who have fully complied with the conditions under R.A. 9 48 0 and these rules shall be entitled to the following immunities and privileges: 1. The taxpayer shall be immune from the payment of taxes, as well as additions thereto, and the appurtenant civil, criminal or administrative penalties under the National Internal Revenue Code of 1997, as amended, arising from the failure to pay and all internal revenue taxes for taxable year 2005 and prior years. 2. . . . 3. . . . The above-stated immunities and privileges shall not apply where the person failed to file a SALN and the Tax Amnesty Return, or where the amount of networth as December 31, 2005 is proven to be understated to the extended of thirty percent (30%) or more, in accordance with the provisions of Section 4 of R.A. 9 48 0 and Section 9, Rule IV hereof." TEcCHD In view of the foregoing, this Office hereby confirms your opinion as follows: 1. The provisions of R.A. 9480 cover all kinds of internal revenue taxes including excise taxes collected and paid at the BOC; and 2. By availing of tax amnesty under R.A. 9480, PTT-PTC is immune from the payment of excise tax, VAT and the corresponding penalties assessed on its imported petroleum and other petroleum products for taxable year 2005 and prior years. 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. cCAIDS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service