BIR Ruling [DA-349-04]

June 25, 2004 BIR RULING [DA-349-04] 57 (B) DA-300-2003 PLDT General Office P.O. Box 2148, Makati City Philippines Attention: Ms. Kathyrn A. Zarate Head, Tax Planning Center Gentlemen : This refers to your letter dated February 10, 2004 requesting in behalf of ePLDT, Inc. for exemption from the creditable expanded withholding tax. It is represented that ePLDT, Inc. is a company incorporated and registered with the Securities and Exchange Commission on August 14, 2000 to engage in the business of providing electronic commerce and data support services to its clients; that in November, 2000, ePLDT, Inc. applied and was granted pioneer status as a New IT service firm in the field of Services Related to Internet Data Center by the Board of Investments (BOI) under BOI Certificate of Registration No. 2001-028 dated February 22, 2001; that since ePLDT, Inc. is BOI Registered, it enjoys exemption from paying income tax pursuant to Section 39(a)(1) of the Omnibus Investment Code of 1987 for a period of six (6) years starting January 2001; and that some of ePLDT, Inc.'s clients have been withholding its payments contrary to the provisions of Revenue Regulations No. 2-98, despite its submission to such clients of its BOI Certificate of Registration. In reply, please be informed that under Section 2.57.5(B)(2) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001 implementing Section 57(B) of the Tax Code of 1997, the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from income tax provided by Republic Act No. 7916 and the Omnibus Investments Code of 1987. Accordingly, since ePLDT, Inc. 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, for a period of six (6) years reckoned from August 14, 2000, this Office is of the opinion as it hereby holds, that it is exempt from the payment of the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001 on income payments received by it during the aforementioned period, in connection with its registered activity. (BIR Ruling No. DA-060-2002 dated April 1, 2002) 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. EACIcH Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group