Deductibility of Investment Allowance

May 13, 1980 BIR RULING NO. 055-80 Banahaw Cablecar Resorts Corporation 6th Floor, Sarmiento Bldg. Ayala Avenue, Makati Metro Manila Attention: Atty . Serafin P . Rivera Executive Vice-President Gentlemen : In reply to your letter dated February 19, 1980, please be informed that Section 9(a) of Presidential Decree No. 535 reads as follows: "Sec. 9. Incentives to Philippine Nationals Investing in Registered Tourism Enterprises Qualified Herein. (a) An investment allowance shall be permitted as a deduction from the investor's income to the extent of his actual investment but not to exceed ten percent thereof as provided for in Section 6(a) of Republic Act No. 5186." Under the above-quoted provision, an investor and/or stockholder of your corporation, a Registered Tourism Enterprise as approved by the Philippine Tourism Authority, is entitled to deduct, for income tax purposes, an investment allowance to the extent of his actual investment or in an amount not exceeding 10% of the taxable net income, whichever is lesser. Although the stocks are to be held for a period of not less than three years as provided for in Section 6(a) of Republic Act No. 5186, the investment allowance shall be claimed as deduction only for the taxable year when the investment was made. cdti Very truly yours, EFREN I. PLANA Acting Commissioner