DMC Urban Property Developers, Inc.

December 14, 2009 BIR RULING [DA-(IL-044) 775-09] 57 (B); EO 226; DA (IL-026) 426-09; DA (IL-025) 425-09; DA (IL-024) 410-09; DA-273-2006; 189-2000 DMC Urban Property Developers, Inc. 2/F 2281 Chino Roces Ave. Makati City Attention: Mr. Joy B. Fajardo Accounting Officer Gentleman : This refers to your letter dated September 10, 2008 stating that DMC Urban Property Developers, Inc. (DMC-UPDI) is a realty corporation duly organized and existing under and by virtue of the laws of the Philippines. It has ninety (90) residential condominium units in Ecoland 4000 Residence located in Eco-West Drive, Ecoland, Davao City duly registered with the Board of Investments (BOI) as a new developer of Low-Cost Mass Housing Project on a non-pioneer status and was issued Certificate of Registration No. 2007-234 dated November 29, 2007. As such, the company is entitled to Income Tax Holiday (ITH) incentive under Executive Order (EO) No. 226, otherwise known as the Omnibus Investments Code of 1987, as amended, for a period of four (4) years from the date of registration. On the basis of the foregoing, you now request for an opinion that creditable withholding tax (CWT) will not apply on your sale of condominium units in Ecoland 4000 Residence pursuant to the Omnibus Investments Code of 1987, as amended. 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, the withholding tax prescribed in the said regulations shall not apply to income payments made to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law (general or special) like the Omnibus Investments Code of 1987. Accordingly, since DMC-UPDI 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 4 years reckoned from October 2007 or actual start of commercial operations or selling, whichever is earlier, but in no case earlier than the date of registration, this Office is of the opinion as it hereby holds, that DMC-UPDI is exempt from the payment of the CWT imposed under RR No. 2-98, as amended, on income payments received by it from its registered project during the afore-mentioned period with respect to its registered activity, subject however to the condition that both the BOI General and Specific Terms and Conditions for the Grant of ITH are met during the said period. ACDTcE This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained 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