Triple "E" Metal Products Co.

July 22, 2009 BIR RULING [DA-(OSL-025) 388-09] R.A. 7459; RR 19-93; DA (OSL-017) 438-2008 dtd. 11/19/08 Triple "E" Metal Products Co. 2026C Dayrit Cpd., Gen. T. de Leon Karuhatan, Valenzuela City Attention: Meland G. Dilodilo Inventor Gentlemen : This refers to your letter dated January 12, 2009, requesting Tax Incentives and Exemption pursuant to Republic Act (R.A.) No. 7459, otherwise known as the "Inventors and Incentives Act of the Philippines". Documents submitted disclosed that you, with TIN: 005-367-263 are the registered patent holder of the following products, as endorsed by TAPI-DOST contained in their letters dated June 19, 2007 and March 17, 2008, to wit: Patent Registration Numbers: Title of UM/ID Registration Date Issued Date of 1st Number Comm'l. Order GAS BURNER w/ Built-In 2-2001-00234 March 7, 2006 Aug. 8, 2006 Regulation Improved Portable Gas Lamp 2-2000-00473 April 20, 2004 Sept. 21, 2006 Improved Portable Gas Lamp 2-2002-0069 October 13, 2003 Oct. 28, 2003 (Gasulite) An Improved Gas Assy (9K 2-2001-00386 July 24, 2003 Oct. 7, 2004 Turbo) Gas Burner Classic 3-2003-000552 August 18, 2004 Nov. 24, 2004 Aluminum Burner (5 stand) 2-2004-000424 December 4, 2006 May 22, 2008 Portable Gas Lamp 3-2002-000157 1ext EXT 3-8-07 Aug. 21, 2007 An Improved Gas Burner 2-2003-000358 April 23, 2007 May 16, 2007 A Gas Burner Head w/ Turbo 2-2006-000508 September 17, 2007 Oct. 7, 2004 Flame Twister LPG Cylinder Valve 5 Star 3-2003-000553 Ext September 18, June 16, 2008 2007 A Gas Burner GS3 3-2006-000908 June 16, 2008 July 24, 2008 that you are an accredited member of the Filipino Inventors Society (FIS); that the above-mentioned patented inventions are being commercially produced, distributed and marketed nationwide at various dates indicated above, by Triple "E" Metal Products Co.; and that the Inter-Agency Screening Committee has evaluated and recommended that you are eligible for the tax incentives under the aforesaid law. IaHSCc In reply, please be informed that R.A. 7459, as implemented by Revenue Regulations No. 19-93 dated July 27, 1993, particularly Section 6 thereof states that: "SEC. 6. Tax Exemption. To promote, encourage, develop and accelerate commercialization of technologies developed by local researches or adopted locally from foreign sources including inventions, any income derived from these technologies shall be exempted from all kinds of taxes during the first ten (10) years from the date of the first sale, subject to the rules and regulations of the Department of Finance: . . ." (italics supplied) However, the inventor is subject to the following taxes: 1. 20% final withholding taxes on interest from currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements and 7 1/2% final withholding tax on interest from foreign currency deposit; 2. Capital gains tax on sale of shares of stock prescribed under Section 24 (C) of the Tax Code of 1997; 3. Capital gains tax on sale of real property prescribed under Section 24 (D) of the Tax Code of 1997; 4. Income tax on income not arising from the inventor's productive activity such as interest, royalties, prizes, winnings and dividends; 5. Value-added tax (VAT) on the gross receipts/revenues derived from the sale of the said invention products, and also VAT for which the inventor is not directly liable, e.g. , VAT on his purchases of raw materials, supplies and equipment/machinery, which may be shifted to him as part of the cost of goods sold or for services rendered; and 6. Other percentage taxes under Title V of the Tax Code; and 7. Excise taxes directly payable in connection with the sale of invention products; 8. Documentary stamp tax on documents, instruments and papers. The said exemption can be availed of during the first ten (10) years from the date of the first sale on a commercial scale, provided that said exemption privileges pertaining to the invention shall be extended to the legal heir or assignee upon the death of the inventor. It is important to note that the Final Resolution of the Office of the President (OP), in OP Case No. 03-G-422 dated February 2, 2004, affirming the finding of the Department of Finance denying the appeal of an inventor relative to his tax exemption privileges granted by this Office, clarifies that the only tax exemption granted by the first paragraph of Section 6 of R.A. 7459 merely refers to income tax . CacEID Moreover, the inventor shall register with the proper Revenue District Officer as a withholding agent and as such shall withhold taxes (1) on the wages/salaries of his employees; (2) on his income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57 (B) of the Tax Code of 1997; and (3) on government money payments pursuant to R.A. No. 1051, as implemented by Revenue Regulations No. 4-88, as amended by Revenue Regulations No. 10-93, and as last amended by Revenue Regulations No. 2-98. Finally, the inventor shall prepare and file in triplicate on or before April 15 of each year for the preceding calendar year an Annual Information Return with the Revenue District Officer having jurisdiction over his place of business. It is of course understood, that her books of accounts and other pertinent records shall be subject to periodic examinations by our revenue enforcement officers for purposes of ascertaining whether she has been complying with the conditions under which she has been granted tax exemption or tax incentives and her tax liability, if any, pursuant to Section 235 of the Tax Code of 1997. (BIR Ruling No. 653-95 dated March 8, 1995) 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service