BIR Ruling [DA-401-05]

September 26, 2005 BIR RULING [DA-401-05] RR 2-98; DA-089-2005 dtd 3/14/05 Asia Pacific Medical & Diagnostic Services, Inc . 3rd Flr. 2053 Bldg. Edison cor. Faraday Sts., San Isidro Makati City Attention: Marita Capinpin Senior Accountant Gentlemen : This refers to your letter dated September 8, 2004, requesting exemption from the payment of taxes being an entity registered with the Board of Investments (BOI). It could be ascertained from records that you are registered with the Securities and Exchange Commission (SEC) on March 4, 1999; that your primary purpose is to engage in the business of providing medical and health services and products, specifically radiology, pathology, and the likes; and for this purpose, establish, maintain and operate clinics, hospitals, or infirmaries, import or acquire by purchase or otherwise such medical and health products among other things; that you are likewise registered with this Bureau (BIR) on April 12, 1999 as having to engage in other hospital activities, medical and dental practice; that further, you are registered with the Board of Investments (BOI) on June 21, 1999 with Certificate of Registration No. 98-143; that, as such you are granted an Income Tax Holiday (ITH) for six (6) years from October 1999 or from actual start of commercial operation, which is July 1, 2000, whichever comes first. In reply, please be informed that Section 2.57.5(B) of Revenue Regulations No. 2-98 is explicit in its provisions that the expanded withholding tax does not apply to income payments to persons enjoying exemption from the payment of income taxes pursuant to the provisions of any law, general or special. A BOI-registered enterprise enjoys exemption from payment of income tax pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987, such as the Income Tax Holiday (ITH). Such being the case, your company being a BOI-registered enterprise and enjoying the income tax holiday is exempt from the 2% withholding tax on income payments it received from its customers whether ECOZONE registered or customs territory enterprises. (BIR Ruling DA 381-2000 dated November 7, 2000) This ruling is being issued on the basis of the foregoing facts as narrated. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. DSTCIa Very truly yours, (SGD.) JOSE MARIO C. BUAG OIC-Commissioner of Internal Revenue