BIR Ruling [DA-377-03]

October 20, 2003 BIR RULING [DA-377-03] International Freeport Traders, Inc. 3 b Strata 2000 Bldg. Emerald Avenue Ortigas Complex, 1605 Pasig City Attention: Edgar B. Alcantara Accounting Manager Gentlemen : This refers to your letter dated August 29, 2002 requesting for opinion if you can continue to avail of the allowable deduction in the calculation of gross income earned under Revenue Regulations No. 1-95, as amended by Revenue Regulations No. 16-99 as a registered enterprise within the Subic Bay Metropolitan Authority. It is represented that International Freeport Traders, Inc. (Freeport Exchange) is a domestic corporation engaged in the business of buying, selling, distributing and marketing at wholesale or retail of goods as a duty free store at Subic Bay Freeport Zone; that as a registered enterprise pursuant to SBFE Certificate No. 93-0011, it has been granted special rights and privileges in accordance with Republic Act No. 7227, otherwise known as the "Bases Conversion and Development Act of 1992" enumerated as follows: DSEaHT "ARTICLE I. The Company shall be classified as a Subic Bay Freeport Enterprise, as such. term in defined under Section 3, Paragraph G of the Implementing Rules, for the purpose of engaging in the business of buying, selling, distributing and marketing at wholesale or retail of goods from Building No. 640 Sampson Road, Subic Bay Freeport Zone. "ARTICLE II. The Company is hereby granted a PERMIT TO OPERATE the aforementioned business at the address specified in Article 1. "ARTICLE III. The Company shall enjoy all the rights, privileges, and benefits established under the Act and Implementing Rules with regard to the business and the location described above. "ARTICLE IV. The Company shall be entitled to tax- and duty-free importation of raw materials, capital equipment, and household and personal items for use solely within the Subic Bay Freeport Zone pursuant to Sections 12(b) and 12(c) of the Act and Sections 43, 45, 46, and 49 of the implementing Rules. All importations by the Company are exempt from inspection by the Societe Generale de Surveillance if such importations are delivered immediately to and for use solely within the Subic Bay Freeport Zone." That to implement the said Act, Revenue Regulations 1-95 was enacted which provided under Section 3, paragraph O thereof allowable deductions for the calculation of gross income earned. However, the said section was amended by Revenue Regulations 16-99, by providing for allowable deductions for registered enterprises. Your company to date is computing its income tax liability based on the provisions of Revenue Regulations 1-95. In reply, please be informed that Revenue Regulations No. 16-99 amended Revenue Regulations 1-95 by providing for allowable deductions in the calculation of gross income of registered enterprises, among others. Accordingly, International Freeport Traders, Inc. can continue to avail of the deductions under Revenue Regulations No. 1-95 for as long as it continues to enjoy the tax benefits and incentives of registered enterprise. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group