BIR Ruling [DA-533-06]

September 4, 2006 BIR RULING [DA-533-06] DA 089-05 Omico Corporation 1109 East Tower Philippine Stock Exchange Centre Exchange Road, Ortigas Center Pasig City Attention: Ms. Tita C. Potenciano Comptroller Gentlemen : This refers to your letter dated August 4, 2006 requesting for a ruling that the income payments to Omico Corporation are not subject to creditable withholding tax pursuant to Section 2.57.5(B)(2) of Revenue Regulations No. 2-98, as amended. It is represented that Omico Corporation is duly registered with the Board of Investments (BOI) under Certificate of Registration No. 2006-056 dated April 24, 2006; that it is registered as a New Developer of Mass Housing Project of Sta. Rosa Homes in Sta. Rosa, Nueva Ecija on a Non-Pioneer Status; that the company started commercial operation/selling in June 2006; and that it is entitled to an income tax holiday (ITH) for a period of four (4) years from June 2006 or actual start of commercial operations/selling, whichever is earlier. In reply thereto, please be informed that Section 2.57.5(B)(2) of Revenue Regulations No. 2-98, as amended, 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. BOI-registered enterprises enjoy exemption from payment of income taxes pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987, such as the income tax holiday. SUCH BEING THE CASE, Omico Corporation being a BOI-registered enterprise enjoying income tax holiday under a special law is exempt from the creditable withholding tax on income payments it received from its customers whether ECOZONE registered or customs territory enterprises. ( BIR Ruling No. DA089-05 dated March 14, 2005 ) 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. TaEIcS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service