BIR Ruling [DA-296-96]

July 30, 1996 BIR RULING [DA-296-96] Ettea Corporation Unit C-21 St., Joseph Townhouse Tandang Sora, Quezon City Attention: Mr. Edgardo E. Ignacio President Gentlemen : This refers to your letter dated September 11, 1995 stating that you are a company which exclusively renders exploration consulting services as a subcontractor to the oil companies (Service Contractors) who are engaged in petroleum explorations in the Philippines under PD 87; that all your gross income derived from such services/activities is subject to a final 8% corporate income tax which is being withheld by the oil companies service contractors; and that in the audit/examination of your 1994 income tax return by our investigating examiner, you are being required to seek clarification as to whether you are indeed subject only to a final tax equivalent to 8% of your gross income. In reply, please be informed that in VAT Ruling No. 516-88 dated November 16, 1988, this Office ruled that the gross income of subcontractors and alien employees of service contractors engaged in petroleum operations in the Philippines are exempt from all taxes, including VAT except the 8% final income tax; and that the said preferential tax treatment privilege which was withdrawn by EO 93 was restored by FIRB Resolution No. 19-87, subject to the terms and conditions of PD 1354. The aforesaid VAT ruling has not yet been revoked as of this date. Such being the case, your gross income as a subcontractor to oil companies engaged in petroleum operations in the Philippines under PD 87 is subject only to a final income tax equivalent to 8% of such gross income which shall be in lieu of any and all taxes, pursuant to PD 1354 as implemented by Revenue Regulations No. 15-78. EaDATc This ruling in being issued on the basis of the foregoing representations and will be revoked if the facts are not as represented. Very truly yours, (SGD.) ALICIA L. TOMACRUZ Head Rev. Executive Assistant Legal Service