BIR Ruling [UN-123-95]

March 28, 1995 BIR RULING [UN-123-95] Mr. Mario C. Villarta Villarta's Handicraft Arnel Street, Lemen's Village Mabiga, Mabalacat, Pampanga M a d a m : This refers to your letter dated December 6, 1994, in effect, requesting for a confirmation of your opinion that as a duly registered Countryside and Barangay Business Enterprises (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. cdtech In reply, please be informed that pursuant to Section 3 of Republic Act No. 6810 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 in relation to Section 4(b) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, stating: "SEC. 4. Exemption from Withholdings . 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: xxx xxx xxx we hereby confirm your opinion that you are exempted 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) It is understood, however, that as interpreted by the Department of Finance, the exemptions herein shall likewise not apply to taxes on income not arising from CBBE productive activity, such as interest, royalties, prizes, winnings and dividends. (ref: Releasing the Potential of the Countryside: Implementing Guidelines for Kalakalan 20. Department of Trade and Industry) This ruling is issued on the basis of the foregoing representations. However, if upon investigation, the facts turned out to be different, and/or if one of the requirements in this letter is not complied with, then this ruling shall be declared null and void. cdta Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Rev. Executive Assistant Legal Service