Pagarigan Accounting & Law Office

October 22, 2009 BIR RULING [DA-(II-032) 616-09] Sec. 57 (B); DA (C-043) 173-2009 dtd 3/3/09 Pagarigan Accounting & Law Office 1561 Blumentritt, Sampaloc Manila 1008 Attention: Ramon Wilfredo B. Pagarigan Counsel Gentlemen : This refers to your letter dated July 10, 2009 requesting in behalf of your client, SEAOIL PHILIPPINES, INC., a confirmation of your opinion that the income payment to the company in connection with its BOI registered activities shall not be subject to creditable withholding tax, pursuant to the Omnibus Investments Code of 1987 and Revenue Regulations No. 2-98, as amended. It is represented that SEAOIL PHILIPPINES INC. (SPI, for short), with TIN: 005-054-970-000 is a domestic corporation duly registered with the Board of Investments (BOI) under Registration No. 200-103, dated August 31, 2006; that it has the status of an Existing Participant with New Investments in Storage, Marketing, and Distribution of Petroleum Products under RA 8479 (Downstream Oil Industry Deregulation Act) because of the expansion and upgrade of four (4) of its petroleum tanks; that the company has been given an Income Tax Holiday incentive for a period of five (5) years (01 January 2007 to 31 December 2011), subject to the base figure of 66,960,000 liters representing the maximum annual capacity of existing petroleum tanks. In reply, please be informed that under Section 2.57.5 (B) (2) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001 implementing Section 57 (B) of the Tax Code of 1997, as amended, withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investments Code of 1987. Accordingly, since SEAOIL PHILIPPINES INC. is a BOI registered enterprise, enjoying exemption from payment of income taxes pursuant to the Omnibus Investments Code of 1987, this Office is of the opinion as it hereby holds, that it is exempt from the payment of the creditable withholding tax imposed under Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 6-2001 on income payments received by it during the specified period in connection with its registered activity. EHSTcC 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service