BIR Ruling [DA-549-04]

November 5, 2004 BIR RULING [DA-549-04] SGV & Co . 6760 Ayala Avenue Makati City Attention: Atty. Rafael C. Vinzon Gentlemen : This refers to your letter dated September 6, 2004 requesting further confirmation of your opinion regarding BIR Ruling DA-251-2003 dated August 8, 2003, that the directors employed by Cypress Semiconductor Philippine Headquarters Ltd. Regional Operating Headquarters (CSPHL-ROHQ) and performing qualifying services on its behalf pursuant to Section 25(C) of the Tax Code of 1997 and who are occupying managerial and/or technical positions are entitled to the 15% preferential tax rate as provided under Republic Act (R.A.) Nos. 8756 and 8424 and their implementing rules. It is represented that in BIR Ruling No. DA-251-03 dated August 1, 2003, this Office described in detail the managerial and technical functions of the directors employed by CSPHL-ROHQ by reason of which they are entitled to the 15% preferential tax rate; and that the specific position/job title and the corresponding duties/job description of the said directors are as follows: 1. EQUIPMENT ENGINEERING & AUTOMATION. Primary responsibility is to support equipment procurement installation buy-off and maintenance function for SPML (Sunpower Phil Manufacturing Ltd.). Support corporate local and Wafer Fab 7 (Round Rock Texas, USA) automation requirements in design and fabrication of corporate wide Manufacturing plant automation. He is also responsible in coordinating equipment engineering and automation operations in delivering customer satisfaction in terms of high equipment uptime, yield and quality. He coordinates organization in achieving high equipment performance, cost avoidance improve equipment efficiency, reduce cost/wafer as well as staffing. 2. FACILITY MANAGER Primary responsibilities are to administer and coordinate the facility activities of Sunpower Philippines Manufacturing Ltd. (SPML). Provide support to CML (Phils.) and CMI (US) on Facility activities for its operations. 3. FINANCE MANAGER. Primary responsibility is to administer Finance and Accounting activities of Sunpower Philippines Mfg Ltd Branch Office and Sunpower Caymans. HEaCcD 4. HRD MANAGER. Primary responsibility is the general administration of the Human Resources and Development functions of SunPower Philippines Manufacturing Ltd. and closely coordinates manpower headcount and institutionalizing job descriptions of PV industry with SunPower Corporate, U.S.A. 5. ITG Manager (SUNPOWER). He will be responsible in the business planning of the Infrastructure, Manufacturing and Business Systems. Duties include, among others: (a) strategic plan formulation for all 3 sections, (b) overseeing the implementation of IT projects, (c) customer satisfaction, (d) planning corporate deployments and (e) driving the local IT organization from mere support oriented group to becoming a value-added competency in Solar Cell manufacturing. 6. PLANT MANAGER. Responsible in administering the overall plant operations for SunPower Philippines Manufacturing Ltd. and deploying U.S. corporate directives in terms of operational efficiency, yield and financial profitability 7. PURCHASING & LOGISTICS MANAGER. Primary responsibility is the general administration of the Purchasing and Logistics Department of SPML (SunPower Philippines Manufacturing Limited). Provide support to Cypress Texas SunPower Corporation at Round Rock, Texas, USA on material and logistical activities for its operations. 8. QUALITY ASSURANCE MANAGER Responsible for business planning Quality Assurance functions of SunPower Philippines Manufacturing Ltd., Document Management Control for SunPower Sites (Phils. & US), Incoming and Outgoing Quality, Ensures SunPower Compliance to ISO Standards, Calibration Control, Corrective and Preventive Management Program; 9. MANUFACTURING MANAGER. Primary responsibility is the general administration of the manufacturing and planning operations of SunPower Mfg Ltd plant, in delivering customer satisfaction in terms of high efficiency solar cell wafers, on-time delivery, cycle time, yield, quality and cost. Administer the organization in terms of staffing, attainment of high machine uptime; cost reduction initiatives, execution of engineering evaluation runs and implementation of manufacturing best practices. Provide support to SunPower engineering and product activities. Support local and regional Modcos on the aspect of packaging, process development and product needs. 10. PROCESS ENGINEERING MANAGER. Responsible in administering the process engineering operations for SunPower Philippines Manufacturing Ltd. to yield 20% cell efficiency at the most efficient manner. WHEREFORE, in view of the foregoing , this Office hereby confirms your opinion that the above-described directors of CSPHL-ROHQ who are performing the above-described qualifying services on behalf of the ROHQ pursuant to Section 25(C) of the Tax Code of 1997 in relation to R.A. Nos. 8756 and 8424 and their implementing rules are indeed entitled to the 15% preferential tax rate prescribed in Section 25(C) of the Tax Code of 1997. 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, and then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group