BIR Ruling [DA-404-06]

June 28, 2006 BIR RULING [DA-404-06] Petrolift Classed Carriers, Inc . 6F Mafre Asian Corporate Center 1220 Acacia Ave., Ayala Alabang Muntinlupa City Attention: Ms. Regina F. Magbitang General Manager Gentlemen : This refers to your letter dated February 23, 2005 indorsed to this Office by the Department of Finance on April 5, 2005, requesting exemption from the payment of income tax pursuant to Republic Act (RA) No. 9301, amending certain provisions of RA No. 7471, entitled "AN ACT TO PROMOTE THE DEVELOPMENT OF PHILIPPINE OVERSEAS SHIPPING." Inasmuch as PETROLIFT CLASSIFIED CARRIERS, INC. is classified to be engaged in the international or overseas trade and is accredited by the Maritime Industry Authority (MARINA) as such, it is therefore exempt from income tax for a period of ten (10) years counted from July 27, 2004, in accordance with Section 2 of R.A. No. 9301, subject, however, to the conditions set forth therein, viz.: "(a) The entire net income, after deducting not more than fifteen percent (15%) thereof for distribution of profits or declaration of dividends, which would otherwise be taxable under the provisions of Title II of the National Internal Revenue Code, is reinvested for the construction, purchase, or acquisition of vessels and related equipment and/or in the improvement or modernization of its vessels and related equipment in accordance with the regulations; and b) The cumulative amount so reinvested shall not be withdrawn for a period of seven (7) years after the expiration of the period of income tax exemption or until the vessel or related equipment so acquired have been fully paid, whichever date comes earlier. cSIADa Any amount not so invested or withdrawn poor to the expiration of the period stipulated herein shall be subject to the corresponding income tax, including penalties, surcharges and interests." Please be guided accordingly. (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service