BIR Ruling [UN-211-95]

June 9, 1995 BIR RULING [UN-211-95] Keyrin Electronics (Phils.), Inc. Lot 9, Block 9, 2nd St., North Ave. Cavite Export Processing Zone Rosario, Cavite Attention: Ms . Mary Ann A . Santiago Accountant Gentlemen : This refers to your letter dated February 24, 1995, requesting for the issuance of a certificate of exemption from the 1% withholding tax on income payments made to you as a local supplier of goods. Documents submitted show that you are an export enterprise registered with the Export Processing Zone Authority (EPZA) with a Certificate of Registration No. 93-34 dated July 22, 1993; that your business activity within the zone is the manufacture and assembly of micro speaker and receiver unit for telecommunication, which are transferred and sold to Maxon System (Phils.), Inc. as one of its raw materials in the manufacture and final assembly of cellular phone exported throughout the world; and that Maxon System (Phils.), Inc. is also an EPZA registered enterprise and reputedly one of the top 5,000 corporations in the Philippines. In reply, please be informed that Section 4(b)(2) of Revenue Regulations No. 6-85, as amended by Revenue Regulations No. 12-94, 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 Investment Code of 1987, as amended. As an EPZA-registered enterprise, you are enjoying exemption from payment of income taxes pursuant to the provisions of Section 39(a)(1) of the Omnibus Investments Code of 1987. Such being the case, the income payments made to you by Maxon Systems (Philippines), Inc. as its local supplier of goods shall not be subject to 1% expanded creditable withholding tax prescribed in Revenue Regulations No. 12-94. (BIR Ruling No. UN-112-95 dated March 20, 1995) This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, and/or any of the requirements imposed in this letter is not complied with, then this ruling shall be considered null and void. cdta Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)