BIR Ruling [UN-205-95]

June 15, 1995 BIR RULING [UN-205-95] Seven Seas Resorts & Leisure, Inc. Pamalican Island Cuyo, Palawan Attention: Mr . Leonardo J . Barnachea Financial Controller Gentlemen : This refers to your letter dated October 26, 1994 requesting for a certificate of exemption from withholding tax by virtue of the provision of Section 4(b) of Revenue Regulations No. 12-94. cdtech It is represented that Seven Seas Resorts & Leisure, Inc. is a BOI-registered enterprise with Certificate of Registration No. 90-778 issued on February 21, 1991; that it is classified as a new operator of tourist accommodation facility on a non-pioneer status located in a less-developed area; that under the Omnibus Investments Code of 1987, it is accorded an income tax holiday for a period of six (6) years from the date of original start of commercial operations or from November, 1991; that its actual commercial operations started on January, 1994 due to the delays in the construction period; that you are questioning Sec. 4 (b) of Revenue Regulations No. 12-94 requiring credit card companies to withhold 50% of 1% on all gross amounts paid to any business entity on the sale of goods or services because you contend that since you are enjoying exemption from the payment of income taxes pursuant to the provisions of the Omnibus Investments Code of 1987, the withholding tax prescribed in the aforesaid Regulations shall not apply in your case, hence, you are applying for a Certificate of Exemption from the provisions of R.R. No. 12-94, as amended by R.R. No. 16-94. In reply, please be informed that Sec. 4 (b) (2) of R. R. No. 6-85, as amended by R.R. No. 12-94, and as further amended by R.R. No. 16-94 provides that the withholding tax therein prescribed shall not apply to income payments to persons enjoying exemption from payment of income taxes pursuant to the provisions of the Omnibus Investments Code of 1987, as amended. Considering that you are a BOI-registered enterprise enjoying exemption from the payment of income taxes pursuant to the provisions of Sec. 39 (a) (1) of the said Omnibus Investments Code of 1987, you are therefore not subject to the 50% of 1% creditable expanded withholding tax deducted from your income by the credit card companies relative to your sale of goods and services as a BOI-registered enterprise (BIR Ruling No. 163-94 dated December 2, 1994), but only for six (6) years from the date of the original start of commercial operations or from November, 1991. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation the same are found out to be different from the aforesaid representations, then this ruling shall be rendered null and void. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)