Since Cinemax Studios Will Not Receive Any Payment or Remuneration of Any Kind for the Production of the Feature Film on Dr. Jose Rizal, it is Not Subject to Income Tax and to VAT

July 30, 1996 BIR RULING NO. 086-96 24 102 000-00 086-96 Flores Duran & Associates 2nd Floor, Dona Yolanda Bldg. 7165 A. Marcelo Ave., Marcelo Green Village Paraaque, Metro Manila Attention: Atty . Romeo A . Duran Gentlemen : This refers to your letter dated March 8, 1996 requesting confirmation of your opinion that BIR Ruling No. 004-96 dated January 2, 1996 to the effect that "In reply thereto, please be informed that you are not subject to income tax and VAT relative to the production and theatrical release of the feature film on Jose Rizal which is the major highlight of next year's celebration of the 1996 Rizal Centenary. cdta However, the lessor of the equipment and facilities for the production of the film shall be subject to VAT under Section 102 (a) of the Tax Code, as amended. Likewise, the seller of the raw stock and other film supplies shall be subject to VAT under Section 100 (a) of the Tax Code, as amended, although the cinematographic film which will be used for the production of said feature film is not subject to excise tax under Section 147 (b) (i) of the Tax Code, as amended" can be invoked and used by Cinemax Studios which has been appointed by the National Centennial Commission (Commission) to produce the feature film on Dr. Jose Rizal which will be one of major highlights of this year's celebration of the 1996 Rizal Centenary since it will not receive any payment or remuneration of any kind from the Commission for its Undertaking. In reply thereto, please be informed that your opinion is hereby confirmed. Since, as represented, Cinemax Studios will not receive any payment or remuneration of any kind from the Commission for the production of the feature film on Dr. Jose Rizal , it is not subject to income tax under Section 24 of the Tax Code, as amended and to VAT under Section 102 also of the Tax Code, as amended. However, if it leases out its equipment and facilities for the production of the film, it shall be subject to VAT under Section 102 (a) of the Tax code, as amended. Likewise, the seller of raw stock and other film supplies shall be subject the VAT under Section 100 (a) of the Tax Code, as amended, although the cinematographic film which will be used for the production of said feature film is not subject to excise tax Under Section 147 (b) (i) of the Tax Code, as amended. [BIR Ruling No. 004-96 dated January 2, 1996]. LLphil Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue