BIR Ruling [DA-374-06]

June 15, 2006 BIR RULING [DA-374-06] 57 (B); 082-2004 PNOC Shipping & Transport Corporation S & L Building, 1500 Roxas Boulevard, Manila Attention: Mr. Manuel H. Puey President Gentlemen : This refers to your letter dated April 18, 2006, requesting for exemption from creditable expanded withholding tax, considering that your corporation is a BOI-registered entity. Based on the representations, PNOC SHIPPING & TRANSPORT CORPORATION is a wholly-owned subsidiary of the Philippine National Oil Company, whose core business is transporting finished petroleum products for oil companies to various parts of the country; that you are presently operating four (4) tankers namely: M/Ts Gomburza, Miguel Malvar, Antonio Luna and Dr. J.P. Rizal ; that out of the four tankers, MTs Antonio Luna and Dr. J.P. Rizal are registered with the Board of Investment under the Omnibus Investment Code of 1987(E.O. 226) as new operator of inter-island shipping pure cargo vessel operation and acquisition of one cargo vessel respectively; that under its Certificate of Registration Nos. 2004-003 dated January 6, 2004 and 2005-056 dated May 12, 2005, said registered tankers MTs Antonio Luna and Dr. J. P. Rizal are entitled to fiscal and non-fiscal incentives such as Income Tax Holiday (ITH) for four (4) years commencing on January 6, 2004 up to December 2008 and six (6) years starting May 12, 2005 up to April 2011 respectively. In reply, please be informed that Section 2.57.5(B)(2) of Revenue Regulations (Rev. Regs.) 2-98 as amended by Rev. Regs. No. 6-2001, and as further amended by Rev. Regs. No. 17-2003 implementing Section 57(B) of the Tax Code of 1997, provides that the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from income tax pursuant to the provisions of the Omnibus Investment Code of 1987. Considering therefore, that PNOC SHIPPING & TRANSPORT CORPORATION is a BOI-registered enterprise enjoying ITH for a period of four (4) and six (6) years respectively reckoned from the dates specified in its registered activities of each tanker, pursuant to the provisions of Article 39(a)(1) of the Omnibus Investment Code of 1997, this office is of the opinion as it hereby holds that it is exempt from the payment of creditable withholding tax prescribed in Rev. Regs. No. 2-98, as amended by Rev. Regs. 6-2001 and 17-2003 on income payments received by it during the ITH periods as indicated above, in connection with its registered activity. (BIR Ruling No. DA-082-2004 dated March 01, 2004) 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. STcAIa Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service