BIR Ruling [DA-447-03]

December 5, 2003 BIR RULING [DA-447-03] RR 2-98 BIR Ruling No. DA-399-98 Fujitsu Ten Corporation of the Philippines Unit 1801 A & B West Tower Phil. Stock Exchange Center Ortigas Center, Pasig City Attention: Ms. Mary Jane Go Accounting Manager Gentlemen : This refers to your letters dated July 16, 2003 and August 13, 2003 requesting for a ruling that Fujitsu Ten Corporation of the Philippines is exempted from withholding tax. It is represented that Fujitsu Ten Corporation of the Philippines is a PEZA-registered company with PEZA Certificate of Registration No. 01-063 dated October 26, 2001; that its registered activity consists of its operations registered with BOI and its expansion project involving the manufacture of new models of car audio products, car electronic products and electronic PBC assemblies, and computer software development and maintenance project; and that the ruling will be used to provide your local customers with a document for non-withholding. In reply, please be informed that under Section 2.57.5 of Revenue Regulations No. 2-98, as amended, implementing Section 57(B) of the Tax Code of 1997, the withholding taxes thereon prescribed shall not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. Pursuant to Section 24 of Republic Act No. 7916, otherwise known as the "Special Economic Zone Act," no taxes, local and national, shall be imposed on business establishments operating within the Ecozone. In lieu of paying taxes, 5% of the gross income earned by all business and enterprises within the zone shall be paid to the national government. Such being the case, and since Fujitsu Ten Corporation of the Philippines is a business establishment registered and operating within the Laguna Technopark, it is therefore exempt from the payment of the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended, implementing Section 57(B) of the Tax Code of 1997, provided it pays the 5% preferential tax rate in lieu of local and national taxes. 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 as null and void. SHIcDT Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group