BIR Ruling [UN-439-95]

December 13, 1995 BIR RULING [UN-439-95] Taal Water District Taal, Batangas Attention: Mr . Artemio E . Punzalan General Manager Gentlemen : This refers to your letter dated September 21, 1995, requesting for a certificate of tax exemption under the provisions of R.A. No. 7109 otherwise known as An Act Granting Tax Exemption Privileges to Local Water Districts. In reply, please be informed that pursuant to Section 1 of said Act, you are exempt from the payment of: cdta 1. Income taxes; 2. Franchise taxes; and 3. Duties and taxes, such as the value-added tax, ad valorem and excise taxes on your importations of machinery, equipment and materials required for your operations, provided that such machinery, equipment and materials are not domestically manufactured at comparable and competitive prices and quality. but sill liable to pay the following: 1. Excise taxes; 2. Value-added tax (VAT) on sale of goods and services; 3. Other percentage taxes under Title V of the Tax Code; 4. Capital gains taxes; 5. Income tax on income not arising from the water district's productive activity such as interest, royalties, prizes, winnings and dividends; 6. Final tax of 20% on interest income from Philippine currency bank deposit, yield or any other monetary benefit from deposit substitutes and from trusts fund and similar arrangements; and 7. Documentary stamp tax on documents, instruments and papers. The exemption shall be for a period of five (5) years reckoned from November 19, 1991, the date of effectivity of R.A. No. 7109. Moreover, you shall register with the proper Revenue District Officer as a withholding agent and as such shall withhold taxes (1) on the wages of your employees; (2) income payment to individuals or corporations subject to the expanded withholding tax provided for in Section 50 (b) of the Tax Code, as amended, as implemented by Revenue Regulations No. 6-85, as amended; and (3) on government money payments pursuant to RA 1051 as implemented by Revenue Regulations No. 4-88, as amended by Revenue Regulations No. 10-93. Finally, you shall prepare and file in triplicate on or before April 15, of each year for the preceding calendar year, or if you have designated a fiscal year on or before the 15th day of the fourth month following the close of such fiscal year, an Annual Information Return (BIR Form 1702-A-2) with the Revenue District Officer. aisadc It is of course understood that your books of accounts and pertinent records shall be subject to periodic examination by our revenue enforcement officers for purposes of ascertaining whether you have been complying with the conditions under which you have been granted tax exemption or tax incentives and your tax liability, if any, pursuant to Section 235 of the Tax Code, as amended by PD No. 1959. (BIR Ruling No. 140-94 dated September 20, 1994). Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)