Exemption from the Payment of Income Tax on Income — Overseas Shipping Business

February 19, 1981 BIR RULING NO. 043-81 024-a 000-78 043-81 Baliwag Navigation, Inc. Suites 300-303 Katigbak Bldg. 1011 A. Mabini Street Metro Manila Attention: Mr . Graciano C . Regala Vice-President Gentlemen : This refers to your letter dated July 28, 1979 requesting a ruling as to whether or not your company is exempt from the payment of income tax on income derived from its overseas shipping business. It is represented that Baliwag Navigation, Inc. is a corporation duly organized and existing under Philippine laws whose capital is owned wholly by Filipino citizens; that it is engaged exclusively in the overseas shipping business; that heretofore, its business consisted in the manning and/or management of vessels of foreign registry; that it is contemplating to acquire one or two foreign vessels by charter, lease or lease-purchase agreement; that it will register said vessels under the Philippine flag; and that it will operate these vessels with an all Filipino crew for overseas shipping. In reply thereto, I have the honor to inform you that as a domestic corporation engaged in overseas shipping business, it will not lose its character as such by the mere fact of acquiring foreign vessels by charter, lease or lease-purchase agreement. It is still exclusively engaged in overseas shipping business; hence it is exempt from the payment of income tax on income derived from said overseas shipping business until September 9, 1985, provided that it shall invest the entire net income, after deducting not more than 10% for distribution to stockholders, realized during the period of exemption, which would otherwise have been taxable under the provisions of Title II of the Tax Code, in the construction, purchase, or acquisition of vessels and equipment and/or in the improvement of your vessels and equipment. (Sec. 2, Republic Act No. 1407, as amended by P.D. No. 764) aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner