BIR Ruling [DA-422-00]

December 12, 2000 BIR RULING [DA-422-00] R.A. 7916 DA-418-98 Panorama Development Corp. 1029 E. delos Santos Avenue Quezon City Attention: Ms . Cristina M . Cabasag Accounting Manager Gentlemen : This refers to your letter dated June 6, 2000 requesting for an amendment of BIR Ruling No. DA-234-2000 dated May 17, 9000 granting exemption from payment of the creditable expanded withholding tax on your income payments from lease of real property in accordance with Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, as last amended by Revenue Regulations No. 2-98, pursuant to Section 4(b) of the same regulations; that the pertinent portion of the said ruling is quoted as follows: "It is represented that Panorama Property Ventures. Inc. (PPVI) leases its buildings located at First Cavite Industrial Estate (FCIE) Special Economic Zone and Laguna International Industrial Park (LIIP) Special Economic Zone; and that the ruling from this Office will be furnished to your FCIE and LIIP tenants to be used by the latter as their basis for not subjecting PPVI to the 5% withholding tax on its rental income. In reply, please be informed that Section 4(b)(2) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94 and as further amended by Section 2.57.5(B) of Revenue Regulations No. 2-98 implementing Section 57(B) of the Tax Code of 1997, the withholding tax prescribed in these regulations shall not apply to income payment to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. In connection therewith, under Section 24 of Republic Act (R.A.) No. 7916, otherwise known as the Special Economic Zone Act of 1995, no taxes, local or national, shall be imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses or enterprises within the ECOZONE shall be remitted to the National Government. IaDSEA Such being the case, and since you are a registered ECOZONE Export Enterprise enjoying income tax exemption, among others, pursuant to the provisions of Section 24 of R.A. No. 7916, your income payments from lease of real property are exempt from the payment of the creditable expanded withholding tax imposed under Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, as last amended by Revenue Regulations No. 2-98, pursuant to Section 4(b) of the same regulations. (BIR Ruling No. DA-418-98 dated September 14, 1998)" that you noted that BIR Ruling No. DA-234-2000 failed to include in the narration of facts your warehouse buildings located at Cavite Economic Zone and Calamba Premier Industrial Park-Special Economic Zone which you added in your amended letter dated April 12, 2000; that you also noted that the "ECOZONE export enterprise" on page 2, first paragraph should read "ECOZONE facility enterprise" instead; and that you now seek an amendment of the above ruling inserting "Cavite Economic Zone and Calamba Premier Industrial Park-Special Economic Zone" in the narration of facts and replacing the word "export" with "facility" on page 2, first paragraph. In reply thereto, please be informed that your request is hereby granted since the amendment does not affect the tax exempt status of the transaction. However, all the conditional requirements mentioned in the said ruling remains the same. This amends BIR Ruling No. DA-234-2000 dated May 17, 2000. 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, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group