Eternal Plans, Inc.

September 30, 2008 BIR RULING [DA-(OSL-008) 268-08] Eternal Plans, Inc. Dominga Building III 2113 Pasong Tamo cor. Dela Rosa Streets Makati City Attention: Ms. Brecelda Llagas Gentlemen : This refers to your letter requesting exemption from the payment of income tax pursuant to Republic Act (R.A.) No. 9257, otherwise known as the "Expanded Senior Citizens Act of 2003", as implemented by Revenue Regulations No. 4-2006, as amended. It is represented that the following are senior citizens with their corresponding senior citizen identification cards duly issued by the Office of Senior Citizens Affairs (OSCA), to wit: 1. Flocerfina Varona ID No. 2076929 2. Demetrio Varona, Sr. 2076928 3. Zenaida Lopez 3849 4. Marcelina Ringor 2036 5. Renia Caraan 06-1306 6. Sonia Timban 19949 7. Rosita Samson 2245107 8. Gloria Magdael 04854 and that the above-named senior citizens were certified by the OSCA as qualified senior citizens. In reply thereto, please be informed that Section 3 (a) of Revenue Regulations No. 4-2006, implementing R.A. No. 9257, provides that the senior citizens shall be exempt from the payment of individual income tax provided that their annual taxable income does not exceed the poverty level as determined by the National Economic and Development Authority (NEDA) for the corresponding taxable year. However, a senior citizen who is a compensation income earner deriving from only one employer an annual taxable income exceeding the poverty level or the amount determined by the NEDA thru the NSCB on a particular year, but whose income had been subjected to the withholding tax on compensation, shall, although not exempt from income tax, be entitled to the substituted filing of income tax return under Revenue Regulations No. 2-98, as amended. IDSaAH In the same manner, a senior citizen shall likewise be subject to the following income taxes, to wit: 1. Individual income tax under Section 24 (A) of the Tax Code on the annual taxable income, if it exceeds the poverty level as may be determined by the NEDA, thru the NSCB, for a certain taxable year; 2. 20% final withholding tax on interest income from any currency bank deposit, yield and other monetary benefit from deposit substitutes, trust fund and similar arrangements, royalties (except on books, as well as other literary works and musical compositions, which shall be imposed a final withholding tax of 10%); prizes (except prizes amounting to P10,000 or less which shall be subject to income tax at the rates prescribed under Section 24 (A) of the Tax Code, and other winnings (except Philippine Charity Sweepstakes and Lotto winnings) (Sec. 24 (B) (1), supra ); 3. 7 1/2% final withholding tax on interest income from a depository bank under the expanded foreign currency deposit system (Sec. 24 (B) (1), ibid ) 4. If the senior citizen will pre-terminate his 5-year long term deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificates in such form prescribed by the Bangko Sentral ng Pilipinas before the fifth year, he shall be subject to the final withholding tax imposed on the entire income based on the remaining maturity thereof, viz. : Four years to less than five years - 5% Three years to less than four years - 12%; and Less than three years - 20% 5. 10% final withholding tax on cash and/or property dividends actually or constructively received from a domestic corporation or from a joint stock company, insurance or mutual fund company and a regional operating headquarters of a multinational company, or on the share of an individual in the distributable net income after tax of a partnership (except a general professional partnership) of which he is a partner, or on the share of an individual in the net income after tax of an association, a joint account, or a joint venture or consortium taxable as a corporation of which he is a member or a co-venturer (Sec. 24 (B) (2), supra ) 6. Capital gains tax from sales of shares of stock not traded in the stock exchange (Sec. 24 (C), supra ) 7. 6% final withholding tax on presumed capital gains from sale of real property, classified as capital asset, except capital gains presumed to have been realized from the sale or disposition of principal residence (Sec. 24 (D), supra ) TCaEIc Finally, the benefactor of a senior citizen shall NOT be entitled to claim the additional exemption per dependent (not exceeding four) allowable only to a married individual or head of family with qualified dependent child/children under Section 35 (B) 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, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service