Tax Exemption Granted to RISSI

July 12, 1990 BIR RULING NO. 135-90 102 028-84 135-90 Gentlemen : This refers to your letter dated June 1, 1990 requesting confirmation of your opinion to the effect that the Revenue Information Systems Services, Inc. (RISSI) is tax exempt pursuant to Section 1 of Executive Order No. 873. It is represented that RISSI is a non-stock corporation organized under Philippine laws and duly registered with the Securities and Exchange Commission on August 14, 1981; that it is wholly-owned and controlled by the Government, through a Board of Trustees composed of the Minister (now Secretary) of Finance and Deputy Minister (now Undersecretary) of Finance, the Commissioner of Internal Revenue and his two deputies; that as initial revolving fund of the corporation, the amount of P50,000.00, which came from the Bureau of Internal Revenue (BIR) Intelligence Fund as approved by then President Ferdinand E. Marcos and former Minister of Finance Cesar Virata were assigned and transferred to the five (5) original incorporators in trust and contributed for and in behalf of the Government; that to avoid the duplication of functions, Executive Order No. 873 effective February 1, 1983 was issued abolishing the Data Processing Center (DPC) of the BIR and its functions as well as data processing activities for the BIR were taken over by RISSI; that obviously, the equipment and assets of the DPC comprised the initial equipment and assets of RISSI; and that RISSI renders data processing and allied services to the BIR for a fee pursuant to a contract executed by and between the BIR and RISSI. In reply, please be informed that the tax-exemption of RISSI under Section 1 of Executive Order No. 873 effective February 1, 1983, pertinent portion of which is quoted as follows: "Sec. 1. The Data Processing Center of the BIR, together with the Regional Data Centers, are hereby abolished and their activities shall be contracted to free of tax and performed by the Revenue Information Systems Services, Inc. (RISSI), a wholly government-owned foundation . . . ." has been withdrawn by P.D. Nos. 1931 and 1955 effective June 11, 1984 and October 15, 1984, respectively. In other words, RISSI is treated for tax purposes like any other private corporation registered with the Securities and Exchange Commission. In view of the foregoing, since RISSI is a separate corporate entity engaged in the activity of rendering computerized data processing and allied services for a fee, and as it is not exempt from taxes under Sections 26 or 103 of the Tax Code, it is subject to income tax and VAT pursuant to Sections 24 (a) and 102, respectively, of the same Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner