Tacloban Oil Mills, Inc.

July 20, 2007 BIR RULING [DA-396-07] R.R. 2-98 DA-376-2004 Tacloban Oil Mills, Inc. Brgy. Opong, Tolosa Leyte Attention: Aibe Uy Tan Corporate Secretary Gentlemen : This refers to your letter dated May 15, 2007, requesting for a ruling, to wit: "We would like to request from your good office for a Tax Exemption Certificate pursuant to Revenue Regulations No. 2-98 (BIR Ruling No. 020-95 dated February 13, 1995) stating that a BOI registered enterprise, enjoying exemption from payment of income taxes is exempt from payment of creditable withholding tax on income payments received by the company." Documents submitted disclosed that Tacloban Oil Mills, Inc. (TOMI) is registered with the Board of Investments (BOI) under Certificate of Registration No. 2006-100 dated August 29, 2006; and that it was granted an Income Tax Holiday (ITH) on its sale from the registered activity for a period of four (4) years from January 2007 or actual start of commercial operations, whichever is earlier, but in no case earlier than the date of its registration. 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 for a period of four (4) years from January 2007 or the actual start of operation, whichever is earlier, pursuant to the provisions of Article 39 (a) (1) of the Omnibus Investments Code of 1987, the income payments made by your suppliers in connection with 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. DA-376-2004 dated July 6, 2004 citing BIR Ruling No. 163-94 dated December 2, 1994 ) However, the salaries paid to your employees are subject to withholding taxes pursuant to Sec. 57 in relation with Sec. 32 (A) (1) both of the Tax Code of 1997. SHEIDC 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. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service