Withdrawal of All Tax and Duty Incentives Granted to Government and Private Entities

April 13, 1988 BIR RULING NO. 137-88 24 000-00 137-88 M a d a m : This refers to your letter dated December 8, 1987 requesting a ruling on the following: 1. Whether Executive Order No. 93 repealed Letter of Instructions No. 1437 including the privileged of the Cultural Center of the Philippines (CCP) to receive all taxes except income tax from its business operations more specifically, the Philippine Plaza Hotel in lieu of being paid directly to the Bureau of Internal Revenue; and 2. How will the taxes received by the CCP from the Philippine Plaza Hotel be treated beginning March 10, 1987, the effective date of Executive Order No. 93? Will CCP be required to remit said taxes to the BIR or will CCP be required to report in its corporate income tax return said taxes as one of its taxable income. In reply thereto, please be informed that pursuant to Section 1 of Executive Order No. 93, all tax and duty incentives granted to government and private entities are withdrawn, the provisions of any general or special law to the contrary notwithstanding. Such being the case, CCP's exemption from all forms of taxation whatever under Presidential Decree No. 15, as amended which was maintained by the express provision of LOI No. 1437 has been withdrawn by Executive Order No. 93 effective March 10, 1987. The provision of LOI No. 1437 to the effect that the business operations of the CCP shall remain liable for all taxes which, except for income taxes, shall be remitted directly to the CCP instead of being paid to the Bureau of Internal Revenue is likewise of more force and effectivity. Accordingly, CCP should therefore remit to the Bureau of Internal Revenue all taxes received by it from its business ventures effective March 10, 1987. cdtech While it is true that the withdrawal of the duty and tax exemption privileges of the CCP would cause the dislocation of its financial structure thus jeopardizing its viability and operations as well as those of the projects which it supports nevertheless the "Whereas" clause of Executive Order No. 93 states that assistance to government and private entities may be better provided where necessary by explicit subsidy and budgetary support rather than tax and duty exemption privileges if only to improve the fiscal monitoring aspects of government operations. CCP can therefore request for subsidy or budgetary support from the government to make up for the withdrawal of its tax exemption. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner