Exemption from the Payment of the 10% Overseas Communications Tax

April 1, 1980 BIR RULING NO. 034-80 Messrs. Siguion Reyna, Montecillo & Ongsiako A. Soriano Building Ayala Ave., Makati Metro Manila Gentlemen : This refers to your letter dated July 5, 1979, in support of the request of your client, Philippine Sintop Corporation, for exemption from the payment of the 10% overseas communications tax prescribed by Section 290-A of the Tax Code of 1977, as amended by P.D. No. 1457. It is represented that your client is a preferred pioneer enterprise registered with the Board of Investments under R.A. 5186. In reply, I have the honor to inform you that under Section 8(a) of R.A. No. 5186, as amended, registered pioneer enterprises are exempt from all taxes under the National Internal Revenue Code except income tax on a graduated basis. On the other hand, Section 290-A of the Tax Code of 1977, as amended, enumerates the instances where the 10% overseas communications tax shall not apply, which enumeration does not preclude tax-exempt entities from enjoying exemption from payment of said tax. Accordingly, it is the opinion of this Office, as it hereby holds, that your aforesaid client, a BOI registered pioneer enterprise is exempt from the payment of the 10% overseas communications tax on outgoing messages. It is understood, however, that the exemption of your client from the 10% communications tax shall be subject to the diminishing exemption under Section 8(a) of R.A. 5186. cdta Very truly yours, EFREN I. PLANA Acting Commissioner