BIR Ruling [UN-176-95]

April 28, 1995 BIR RULING [UN-176-95] The Board of Investments Industry & Investments Bldg. 385 Gil J. Puyat Avenue Makati City Gentlemen : This refers to the letter of this Office dated July 15, 1994 to Sycip, Gorres, Velayo & Co., 6760 Ayala Avenue, Makati City in connection with the proposed assessment against its client, United Coconut Chemicals, Inc. (UNICHEM) 17th Floor UCPB Bldg., Makati Avenue, Makati City, involving the amount of P98,926,299.12 representing deficiency income tax for the year 1990, which this Office has finally resolved that UNICHEM is not liable to the payment of the said proposed assessment and the said case is considered closed. It appears that on August 7, 1991, UNICHEM filed its application with the BOI for reduced income tax incentive under Article 48(b) of P.D. 1789 for the calendar year ended December 1990 in the total amount of P246,212,997.00; that the BOI-BIR Working Committee recommended instead a reduced income tax incentive of P234,975,221.00; that the application of UNICHEM for reduced income tax incentive in the amount of P246,212,997.00 as well as the recommendation of the BOI-BIR Working Committee of a reduced income tax incentive of P234,975,221.00 were determined after considering that the actual date of commercial operation of UNICHEM is January 1, 1986. Thus, the Memorandum dated March 12, 1992 of the BOI-BIR Working Committee for the Management Committee of the BOI states that "xxx xxx xxx "III. RECOMMENDED BOARD RESOLUTION, RESOLVED, that application of UNITED COCONUT CHEMICALS, INC., with BOI Registration No. 82-276 and Application No. 91-A4492 for deduction to taxation income in the amount of P234,975,221.00 which was deducted in 1990, be as it is hereby APPROVED, under Section 48 (b) of P.D. 1789. cdtech (Sgd.) (Sgd.) for JULIAN A. BOBIS ERLINDA F. ARCELLANA Investment Specialist Chief Investment Specialist (Sgd.) (Unsigned) GLORY LI. CHANCO DOMINADOR GALURA Director Chief, Industry Audit Division Chemical Industries Dept. Bureau of Internal Revenue xxx xxx xxx However, the Chief of the then Industry Audit Division of the BIR instead of signing the aforementioned Memorandum recommended a proposed assessment of P98,926,299.12 representing deficiency income tax inclusive of increments thereof on the ground that the reduced income tax incentive of UNICHEM expired in 1989. The said issue has already been resolved by the Bureau of Internal Revenue in letter dated July 15, 1994 to the counsel for UNICHEM stating that UNICHEM is not liable to the payment of the aforementioned proposed assessment and that the case is considered closed. In view thereof, this Office is concurring with the Memorandum dated March 12, 1992 of the then BOI-BIR Working Committee for the Management Committee of the BOI to the effect that UNICHEM is entitled to a reduced income tax incentive of P234,975,221.00 for the year 1990. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)