BIR Ruling [DA-376-04]

July 6, 2004 BIR RULING [DA-376-04] RR 2-98 UN-163-99/DA 231-2002 Yapster E-Travel, Inc. 2301 Tektite East Bldg. Exchange Road, Ortigas 1603 Pasig City Attention: Mr. Bryan U. Yap Chief, Finance Officer Gentlemen : This refers to your letter dated October 30, 2002, which was indorsed to this Office on December 26, 2002, requesting for a confirmation of your exemption from filing creditable withholding tax return since your company is a BOI-registered entity enjoying a six-year income tax holiday. It is represented that YAPSTER E-TRAVEL, INC. is registered with the Board of Investment (BOI) as new IT Service Firm in the field of Software Development and E-Commerce, Internet and Business Applications Solutions Development on a pioneer status under the Omnibus Investment Code of 1987 (E.O. 226); and that it had availed of an income tax holiday for six (6) years starting August, 2001. Hence, this request. In reply, please be informed that Sec. 2.57.5 (B)(2) of Revenue Regulations No. 2-98, as amended, provides that the withholding tax therein prescribed shall not apply to income payments made to corporations registered with the BOI and enjoying exemption from the payment of income taxes pursuant to the provisions of the Omnibus Investment Code of 1987, as amended. Considering that you are a corporation registered with the BOI and enjoying exemption from the payment of income taxes pursuant to the provisions of Article 39 (a) (1) of the Omnibus Investment Code of 1987 until August, 2007, the income payments made to you pursuant to your BOI-registered activities, during the ITH period shall not be subject to creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended. ( BIR Ruling No. 163-94 dated December 2, 1994 and UN 339-94 dated December 6, 1994 ) However, the salaries paid to your employees is subject to withholding taxes pursuant to Sec. 57 in relation with Sec. 32 (A)(1), both of the Tax Code of 1997. 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. HCITAS Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner (Legal and Inspection Group)