Asiatic Development Corporation

August 4, 2008 BIR RULING [DA-(IL-010) 106-08] BIR Ruling No. DA-349-04 & DA-279-05 Asiatic Development Corporation Asiatic Building, Phoenix Sun Business Park E. Rodriguez, Jr. Ave. Libis, Quezon City Attention: Mr. Emiliano C. Estrella SVP-Comptroller Gentlemen : This refers to your letter dated May 9, 2008 requesting for a ruling that since Asiatic Development Corporation (ADC) is entitled to Income Tax Holiday, it is, therefore, not subject to expanded withholding tax and documentary stamp tax during the period of income tax holiday (ITH). A represented, ADC is a real estate developer. It is registered with the Board of Investments as a "New Developer of Mass Housing Project" on a non-pioneer status under Certificate of Registration No. 2008-071 dated April 10, 2008 and 2008-082 dated April 24, 2008, respectively, for its mass housing projects located in Townsville Sto. Tomas Subd. Phase 1 Sto. Tomas, Batangas and Alta Tierra Subdivision Phase 1 Gen. Mariano Alvarez, Cavite. ADC has been granted a four-year income tax holiday incentive for the aforesaid projects from March 2008 and April 2008 or actual start of operations/selling, whichever is earlier, but in no case earlier than the date of registration. In reply, please be informed that under Section 2.57.5 (B) (2) of Revenue Regulations (RR) No. 2-98, as amended, implementing Section 57 (B) of the Tax Code of 1997, as amended, the 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. aSCHcA Accordingly, since ADC is a BOI-registered enterprise, enjoying exemption from payment of income taxes pursuant to the provisions of Section 39 (a) (1) of the Omnibus Investments Code of 1987 for a period of four (4) years reckoned from March 2008 and April 2008, respectively, this Office is of the opinion as it hereby holds, that it is exempt from the payment of the creditable withholding tax imposed under RR No. 2-98, as amended, on income payments received by it during the aforementioned period with respect to its registered activity. However, ITH is an exemption from income tax on income payments received by the company for the duration of the period specified in the Terms and Conditions of the Certificate of Registration. Since DST is not a tax on income but is in the nature of an "excise tax" ( CIR vs. Heald Lumber Company, 10 SCRA 372) imposed either upon the transaction or document, ADC is subject to DST during the period of ITH. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service