BIR Ruling [DA-350-00]

September 26, 2000 BIR RULING [DA-350-00] Atty. Samuel Estimo No. 10 Magreville Avenue Magreville Subdivision Capitol Hills, Quezon City S i r : We acknowledge receipt of your letter dated August 4, 2000 requesting for the second reconsideration of the rulings issued by this Office dated June 13, 2000 and July 24, 2000 which held that the P1 Million prize won by your client, GM Joey Antonio, in the recently held Millennium Chess Tournament is subject to a 20% final withholding tax. You likewise request that the withheld amount of P200,000.00 be refunded to your client. To the point of being repetitive, we have said time and again that exemption from taxation is construed strictly against the taxpayer and in favor of the taxing power. Thus, unless the grant of tax exemption is specific and clear, this Office cannot grant the same such as the exemption from withholding tax which you are so vigorously requesting. What we have been saying all along is that R.A. 7549 did not categorically state in clear and unmistakable language that chess is included in the coverage of the tax exemption. Congress passed laws too numerous to be mentioned, granting tax exemptions which this Office can readily recognize because the tax exemptions are stated in clear, emphatic, and unmistakable terms. The same cannot be said of the exempting provisions of Republic Act No. 7549, in relation to chess, despite the pretensions and protestations to the contrary. On the two points mentioned in your letter, our reading remains as follows: 1. The law provides that it is only the Philippine Olympic Committee that will accredit national sports associations for purposes of tax exemption. If one is to claim otherwise, then the law must be amended. ScTCIE 2. On your argument that the Bicameral Conference Committee did not reject the amendments of the House regarding the proposed enumeration of the particular sports and competitions (which included chess) to be exempted from payment of tax, it still remains a fact that the law does not carry such enumeration. The minutes of the meeting on this point, contrary to your protestations, do not provide the necessary clarification particularly when it was recorded therein that "And we shall do away with the enumeration of these sports included in this bill and, instead, allow it to be enumerated or stated in the rules and regulations to be promulgated in accordance with this bill. " (Minutes, Bicameral Conference Committee on Ways and Means) As we find no regulations concerning the same, then this Office can only look at the basic law on the matter which law does not clearly support the exemption requested. We therefore find no cogent reasons to disturb our earlier rulings and hereby reiterate the same. Considering that this is our final stand on the matter, you may at your option, elevate this matter on appeal with the Secretary of Finance. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue