BIR Ruling [DA-341-03]

October 7, 2003 BIR RULING [DA-341-03] E.O. 226 057-95 dated March 16, 1995 Petrochemical Corporation of Asia Pacific 2nd Floor, Chemphil Building 851 Antonio S. Arnaiz Avenue Legaspi Village Makati City Attention: Ms. Ma. Carmen Gemma C. Montano Controller Gentlemen : This refers to your letter dated June 7, 2002 requesting exemption from the payment of creditable withholding tax on income payments under Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001, as further amended by Revenue Regulations No. 12-2001 on the ground that it is a corporation registered with the Board of Investments (BOI) and enjoying income tax holiday under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987. It is represented that Petrochemicals Corporation of Asia Pacific (Petrocorp) is a corporation duly registered with the Board of Investments as a new producer of polypropylene resin on a pioneer status under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987; that its ITH was granted in January 1993 as indicated in the Certificate of Registration issued by the BOI under "Specific Terms and Conditions"; that on April 2, 2002, its ITH was subsequently amended as follows: November I995, July 1996, May 1997, December 1997 and finally in January 2000; that pursuant to said amendments, Petrocorp's ITH should be reckoned from January 2000 and should therefore mature after six (6) years which is in December 2005. In reply thereto, please be informed that Section 2.57.5(B)(2) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001, as further amended by Revenue Regulations No. 12-2001, implementing Section 57(B) of the Tax Code of 1997 provides that income payments to corporations registered with the Board of Investments and enjoying exemption from the income tax provided by Executive Order No. 226, shall be exempt from the creditable withholding tax. Such being the case, and since as represented Petrocorp is registered with the BOI as a new producer of polypropylene resin enjoying an income tax holiday of six (6) years from January 2000 to December 2006, income payments to PETROCORP shall be exempt from the creditable withholding tax pursuant to Section 2.57.5 of Revenue Regulations No. 2-98, as amended, starting only from January 2000, the amended reckoning date of its income tax holiday incentive, and not in January 1993, as indicated in BIR Ruling No. DA198-96 dated June 17, 1996. ( BIR Ruling No. 057-95 March 16, 1995 ) This amends BIR Ruling No. DA198-96 dated June 17, 1996 with respect to the start of Petrocorp's exemption from creditable withholding tax in relation to the actual start of its income tax holiday. This rulings 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. THacES Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group