BIR Ruling [UN-012-96]

January 6, 1996 BIR RULING [UN-012-96] V.S. Garments Manufacturing 4301 P. Javier St., Polo Plaridel, Bulacan Attention: Mr . Virgilio C . Sacdalan Owner/Manager Gentlemen : This refers to your letter dated May 11, 1995, in effect, requesting for a confirmation of your opinion that as a duly registered Countryside and Barangay Business Enterprise (CBBE) pursuant to Republic Act No. 6810, otherwise known as Kalakalan 20, you are exempt from income tax and consequently from withholding tax under Revenue Regulations No. 12-94. It appears that you were issued a CBBE Certificate of Authority on February 18, 1992, to engage in the manufacture of T-shirts/garments at Polo, Plaridel, Bulacan. In reply, please be informed that pursuant to Section 3 of Republic Act No. 6810, and Section 4 of Revenue Regulations No. 12-94, stating: "SEC. 3. Countryside business entities shall, upon registration, pay two hundred and fifty pesos (P250.00) to the Municipality or City where its principal place of office and business operations are located to cover the cost of the issuance of the license to operate, known as the CBBE Authority. "All CBBEs shall be exempted from all taxes, national or local, license and building permit fees and other business taxes, except real property and capital gains taxes, import duties and other taxes on imported articles. In addition, any and all income, receipts and proceeds derived from the business operations of the CBBE shall be excluded from the computation of gross income for purposes of computing the individual income tax of the owners/members thereof. "It shall be exempted from any and all government rules and regulations in respect of assets, income, and other activities indispensably and directly utilized in proceeding from or connected with the business of the enterprise. xxx xxx xxx "SEC. 4. Exemption from Withholding . The withholding of tax prescribed in these regulations shall not apply to income payments in the following cases: xxx xxx xxx "(b) Income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following:" we hereby confirm your opinion that you are exempt from income tax under Republic Act No. 6810 and consequently, from the expanded withholding tax under Revenue Regulations No. 12-94. (BIR Ruling No. 172-94) This ruling is issued on the basis of the foregoing as represented. However, if upon investigation, it will be disclosed that the facts turned out to be different, then, this ruling shall be declared null and void. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)