Philippine Postal Corporation (1)

December 12, 2013 FIRB RESOLUTION NO. 008-13 SUBJECT MATTER : Philippine Postal Corporation (1) WHEREAS, the Philippine Postal Corporation (PhlPost) was created under Republic Act (RA) No. 7354 to operate a nationwide postal system with a network that extends or makes available provisions of mail services at affordable prices; WHEREAS, in view of this mandate, the PhilPost did not impose the value-added tax (VAT) on its domestic postal services in 2013, thus resulting to an estimated VAT liability of PhP343,745,353.00 thereon; WHEREAS, the imposition of VAT on its domestic postal services will increase the postage rates and make it hard for the PhilPost to survive the competition from private, multi-national and local couriers in the ever changing postal courier and logistics market; WHEREAS, the PhilPost is likewise being assessed for its Minimum Corporate Income Tax (MCIT) for the year 2012 in the amount of PhP13,165,673.37; WHEREAS, the PhilPost does not have the financial capacity to assume the said VAT and MCIT assessments; WHEREAS, from 2007 to 2010, the PhilPost has incurred net losses from its operations that resulted to non-settlement of a number of financial obligations as well as non-implementation of the Salary Standardization Law (SSL); CSaHDT WHEREAS, as compared to private couriers, the PhilPost is mandated to maintain missionary posts albeit located in non-profitable areas nationwide to serve the interest of the general public; WHEREAS, the PhilPost also incurs costs from the franking privileges of various government agencies; WHEREAS, the grant of tax subsidy will help improve the PhilPost's financial liquidity, solvency and capacity to meet its financial obligations; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to approve the application for tax subsidy of the PhilPost in the amount of THREE HUNDRED FIFTY SIX MILLION NINE HUNDRED ELEVEN THOUSAND TWENTY SIX AND 37/100 PESOS (PhP356,911,026.37) only, broken down as follows: Type of Tax/Taxable Year Amount (in PhP) Minimum Corporate Income Tax 2012 13,165,673.37 Actual VAT Assessments 143,981,794.00 1st Quarter of 2013 72,878,153.00 2nd Quarter of 2013 71,103,641.00 Total Actual Tax Assessments 157,147,467.37 VAT Estimated Assessments 199,763,559.00 (3rd and 4th Quarter 2013) Total VAT Liabilities 343,745,353.00 Total MCIT Liabilities 13,165,673.37 Total Tax Liabilities 356,911,026.37 Provided, however , that: (a) the initial issuance of the Certificate of Entitlement to Subsidy (CES) shall be limited to the amount of PhP157,147,467.37 only , representing the actual assessment of the BIR on its MCIT for 2012 and VAT for the first and second quarters of 2013; and (b) the subsequent CES shall be issued only upon the submission by the PhilPost to the FIRB of its actual VAT liability per quarter as reflected in its quarterly VAT return: Provided further, that such availment shall be in accordance with the terms and conditions of Section 13 of RA No. 10352 or the 2013 General Appropriations Act, subject to the availability of funds therefor, pursuant to the terms and conditions of the Rules and Regulations to Implement the Subsidy Provision under Executive Order No. 93. DTAESI (SGD.) LAURA B. PASCUA Undersecretary Department of Budget and Management (SGD.) ADRIAN S. CRISTOBAL, JR. Undersecretary Department of Trade and Industry (SGD.) EMMANUEL F. ESGUERRA Deputy Director-General National Economic and Development Authority (SGD.) ESTELA V. SALES Deputy Commissioner Bureau of Internal Revenue (SGD.) ALEXIS F. MEDINA Director Bureau of Customs (SGD.) TRINIDAD A. RODRIGUEZ Officer-in-Charge National Tax Research Center Head, FIRB Secretariat (SGD.) JEREMIAS N. PAUL, JR. Undersecretary Department of Finance Presiding Officer-FIRB