Exemption of Preferred Pioneer Enterprise from DST

April 28, 1989 BIR RULING NO. 088-89 173 111-81 088-89 Gentlemen : This refers to your letter dated September 21, 1988 stating that your company has been registered with the Board of Investments (BOI) in accordance with the provisions of P.D. No. 1789 as amended by Batas Pambansa Blg. 391 as a preferred pioneer enterprise with the following certificate of registration: cdtech Cert. of Reg. No. Date Issued Registered Product 80-1131 08 August 1980 Integrated Circuit (IC) 81-049 09 June 1981 IC Expansion 84-696 10 April 1984 IC and Magnetic Heads 85-933 25 June 1985 IC Expansion 86-1097 24 March 1986 Printed Circuit Board You now request a ruling that as a preferred pioneer enterprise, you are exempt from the payment of Documentary Stamp Tax (DST). In reply, please be informed that your request is hereby granted. Pursuant to Section 46(a) of Presidential Decree No. 1789, pioneer enterprises registered with the BOI are exempt from all taxes under the National Internal Revenue Code, except income tax, from the date the area of investment is included in the Investment Priorities Plan to the following extent: (1) One hundred percent (100%) for the first five years; (2) Seventy five percent (75%) for the sixth through the eight years; (3) Fifty percent (50%) for the ninth and tenth years; (4) Twenty percent (20%) for the eleventh and twelfth years; and (5) Ten percent (10%) for the thirteenth and fifteenth year. Accordingly, your company is exempt from the payment of documentary stamp tax to the extent of the percentage aforestated on transactions connected with the registered business activity. (BIR Ruling No. 111-81) However, if said transactions conducted by you require the execution of a taxable document with other parties, said parties who are not exempt shall be the one directly liable for the tax. (Sec. 173, Tax Code, as amended; BIR Ruling No. 236-87) In other words, said parties shall be liable to the same percentage corresponding to your tax exemption. Very truly yours, (SGD.) JOSE U. ONG Commissioner