BIR Ruling No. 301-11

August 12, 2011 BIR RULING NO. 301-11 Section 2 (r), Revenue Bulletin No. 01-03 BDO Alba Romeo & Co. 7th Floor, Multinational Bancorporation Centre 6805 Ayala Avenue, Makati City Attention: Tax and Legal Division Gentlemen : This refers to your letter dated 11 August 2009 wherein it is represented that your client, MAGNUS PHILIPPINES, INC. (Magnus), is a corporation duly organized and existing under Philippine laws per SEC Registration No. A199916281 dated November 4, 1999; that Magnus is engaged in the business of providing expert consulting advice in the area of enterprise wide software system selection, implementation and related activities and provides consultancy advice in the area of logistics and supply chain management; that since Magnus started its commercial operation in 1999, it has been operating on a negative income which resulted to a capital deficiency; that on January 1, 2006, Magnus stopped its commercial operation; that the Board of Directors met on November 12, 2007 and approved the amendment of Articles of Incorporation wherein the corporate term was shortened to January 1, 2006; that on December 11, 2008, Magnus filed with the BIR its Application for Registration Information Update requesting for cancellation of its Taxpayer Identification Number and Certificate of Registration by reason of dissolution; that on March 11, 2009, a Certificate of No Outstanding Tax Liability for purposes of dissolution was issued; that on May 12, 2009, Magnus filed with the Securities and Exchange Commission (SEC) for an amendment of its Articles of Incorporation shortening its life until January 1, 2006; that on July 7, 2009, the SEC approved the Amended Articles of Incorporation; that on February 9, 2007, the Assistant Commissioner for Assessment Service endorsed to the Assistant Commissioner for Legal Services to resolve the following issues: 1. Whether or not Magnus has lost its right to claim its excess creditable taxes for taxable year 2001 under the provision of Section 204 (C), the taxpayer having opted to carry-over the excess creditable taxes in the 2002 Annual Income Tax Return consistent with the provisions of Section 76 of the Tax Code of 1997; 2. Whether or not the BIR Form 2307 submitted by the claimant is sufficient and that establishing proof of remittance by the withholding agents is no longer necessary to grant the claim. It is further represented that the endorsement states that the above issues were resolved in Magnus' favor, the amount claimed for issuance of TCC shall be Php5,259,672.80 as the factual basis of the claim has already been established; that on June 20, 2007, Mangus followed-up its request for issuance of TCC but was denied on December 5, 2008 on the ground of prescription [DA(C-166)503-2008]; that the denial states: DASEac "Based on the foregoing, the taxpayer is required to file his claim for tax credit or refund within two (2) years from the time of payment of the tax or penalty. Consequently, since your claim involved unutilized creditable withholding tax for the year 2001, this Office regrets to inform you that the two-year prescription period within which to file claim for TCC or refund had lapsed." In reply, please be informed that this Office cannot issue a ruling on the above matter considering that the issue is considered as a "No-Ruling Area" pursuant to Section 2 (r) of Revenue Bulletin 01-03, to wit: "SECTION 2. List of No-Ruling Areas. The following shall hereby be construed and identified as "No-Ruling Areas": r) Issue/s or transactions involving directly or indirectly the same taxpayer/s which is/are the subject of an investigation, on-going audit, administrative protest, claim for refund or issuance of tax credit certificate , collection proceedings, or a judicial appeal subject to Section 3 hereunder. . . .;" (emphasis supplied) Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue