BIR Ruling No. 500-11

December 15, 2011 BIR RULING NO. 500-11 E.O. 226; RR 2-98; BIR Ruling No. 334-2011 Fog Horn, Inc. 3rd Floor, PGMC Building, 76 Calbayog cor. Libertad Sts. 1554 Mandaluyong City Attention: Mr. Mariano D. Martinez President Gentlemen : This refers to your letter dated June 17, 2010 requesting exemption of FOG HORN, INC. from creditable withholding tax during the Income Tax Holiday (ITH) granted to it by the Board of Investments (BOI) under Executive Order (EO) No. 226 otherwise known as the "Omnibus Investments Code of 1987", for a period of three (3) years. Documents submitted disclosed that FOG HORN, INC. with Taxpayer Identification No. 228-690-663-000, is a domestic corporation registered with the Securities and Exchange Corporation (SEC) under SEC Registration No. CS200400169; that FOG HORN, INC. is duly registered with the Board of Investments (BOI) under Certificate of Registration No. 2010-068 dated March 22, 2010 as an Expanding Developer of Low Cost Mass Housing Project (Savannah Green Plains-Phase 3, Purok 1, Brgy. Cuayan, Angeles City Pampanga) on a Non-Pioneer status; that pursuant to the same Specific Terms and Conditions, FOG HORN, INC. is entitled to an ITH for a period of three (3) years from March 2010 or from the actual start of commercial operations/selling, whichever is earlier, but in no case earlier than the date of registration; that under the same Terms and Conditions, it shall construct and sell One Thousand Three Hundred Forty (1,340) units of low-cost mass housing units based on the following schedule: Year No. of Units Value (P'000) 1 446 325,367 2 446 325,367 3 448 326,826 Total 1,340 977,560 ==== ====== In reply, please be informed that Section 2.57.5 (B) (2) of Revenue Regulations No. 2-98, as amended, by RR No. 6-2001 implementing Section 57 (B) of the Tax Code of 1997, as amended, the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from the income tax provided under Republic Act No. 7918 and E.O. No. 226. aDTSHc Accordingly, since FOG HORN, INC. is a BOI-registered enterprise, revenues generated from FOG HORN, INC.'s registered project Savannah Green Plains-Phase 3, Purok 1, Brgy. Cuayan, Angeles City Pampanga, is exempt from income taxes pursuant to the provisions of Section 39 (a) (1) of the Omnibus Investment Code, for a period of three (3) years from March 2010 or from the actual start of commercial operations/selling, whichever is earlier, but in no case earlier than the date of registration. However, revenues from units with selling price exceeding Three Million Pesos (P3,000,000.00) shall not be covered by the ITH. (BIR Ruling No. 334-2011 dated September 7, 2011) Moreover, FOG HORN, INC. is exempt from the creditable withholding tax imposed under RR No. 2-98, as amended by RR No. 6-2001 on income payments received by in connection with its low-cost mass housing project Savannah Green Plains-Phase 3, Purok 1, Brgy. Cuayan, Angeles City Pampanga subject however to the condition that both the BOI General and Specific Conditions for the grant of ITH are met during the said period. (BIR Ruling No. 334-2011 dated September 7, 2011) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. DEacIT Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue