BIR Ruling [DA-418-04]

August 8, 2004 BIR RULING [DA-418-04] E.O. 226 DA 231-02 Filpride Resources Incorporated 304 J.P. Rizal Street Mandaluyong City Attention: Ms. Aniebeth S. Dionzon Chief Finance Officer Gentlemen : This refers to your letter dated June 22, 2004 requesting for exemption from the payment of creditable withholding tax, on income payments made to you under the Omnibus Investments Code of 1987 (Executive Order No. 226), pursuant to Revenue Regulations No. 2-98, as amended. It is represented that your company is a domestic corporation registered with the Board of Investments (BOI) as a new industry participant for storage, marketing and distribution of petroleum products on a pioneer status; that you were granted certain incentives among others, an income tax holiday (ITH) on the aforesaid registered project: Certificate of Registration No. 2001-117 Coverage of Registration: Four Units Storage Tanks Date of Registration: July 27, 2001 Duration of ITH Availment July 27, 2001 to July 27, 2005 and that the incentive availment of ITH is limited for five (5) years without extension reckoned from the date of forecasted start of operation or from actual start of commercial operation whichever comes first but not earlier than date of registration subject to the imposition of a cap/ and or base figure. In reply thereto, please be informed that Section 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 Investments 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 Investments Code of 1987 until July 2005, the income payments made to you pursuant to your BOI-registered activities, during the ITH shall not be subject to creditable withholding tax prescribed by Revenue Regulations No. 2-98, as amended. (BIR Ruling No. DA231-02 dated December 3, 2002) However, the salaries paid to your employees is subject to withholding tax pursuant to Section 57 in relation with Section 32(A)(1) both of the Tax Code of 1997. TICaEc 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group