Delegation of Authority to Sign Rulings Granting and/or Confirming Tax Exemptions, Tax Incentives as well as Tax Treaty Relief Through the Ruling Process

May 15, 2009 REVENUE DELEGATION AUTHORITY ORDER NO. 003-09 SUBJECT : Delegation of Authority to Sign Rulings Granting and/or Confirming Tax Exemptions, Tax Incentives as well as Tax Treaty Relief Through the Ruling Process TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Objective. Pursuant to Section 7 of the 1997 National Internal Revenue Code (Tax Code),as amended, the power to issue rulings of first impression or to reverse, revoke, or modify any existing ruling of the Bureau rests solely on the authority of the Commissioner of Internal Revenue (Commissioner).Nevertheless, for issues or requests for rulings confirming tax exemptions, tax incentives, or tax treaty relief which have established precedents, the Tax Code, as amended, allows the Commissioner to delegate such authority to his subordinate officials. This Order is issued to clarify and modify the scope of Revenue Memorandum Circular No. 37-2007 with respect to the delegation of authority to sign rulings that involve grants of tax exemptions to the Regional Directors, Assistant Commissioner-Legal Service (ACIR-Legal Service), and to the Deputy Commissioner for Legal and Inspection Group (DCIR-LIG). SECTION 2 . Delegation of Authority. 2.1 Regional Directors. The following shall be under the authority of the Regional Directors (concurrent with the ACIR-Legal Service) for taxpayers falling under their respective jurisdiction: 2.1.1 Tax exemption of senior citizens and persons with disability; 2.1.2 Extension of time for the filing of estate tax return and payment of the estate tax under Sections 90 and 91 of the Tax Code, as amended; 2.1.3 Use of pre-numbered loose-leaf forms, receipts, invoices and books of accounts (manual); 2.1.4 Change of accounting period; 2.1.5 Tax exemption of cooperatives under R.A. 6938, as amended. In view of the concurrent authority given to the ACIR-Legal Service with respect to the above, taxpayers are given the option to file their request either with the Regional Director or the ACIR-Legal Service. However, to prevent the instances of "forum-shopping",if a request for ruling has already been filed with any one of these authorized Officials, the taxpayer is precluded from filing the same request with the other authorized Official. CHIScD Copies of all rulings signed by the Regional Directors, in accordance with the provisions of this Section shall be furnished to the Office of the Commissioner immediately upon issuance. 2.2 ACIR-Legal Service. The delegated authority of the ACIR-Legal Service to sign rulings that involve in any manner the granting, as well as, confirmation of tax exemptions and/or tax incentives, including tax treaty reliefs, with established precedents, shall be limited to the following: 2.2.1 Tax exemption of accredited non-stock, non-profit organizations, under Sec. 30 of the Tax Code, as amended, as implemented by Revenue Regulations No. (RR) 13-98; 2.2.2 Tax exemption on the sale or disposition of principal residence under RR 2-98, as amended by RR 17-2003; 2.2.3 Tax exemption of Government-Owned and/or -Controlled Corporations under Sec. 27 of the Tax Code, as amended; 2.2.4 Tax incentives of Private Sector participating in Socialized Housing Program and Community Mortgage Program under R.A. 7279, as implemented by RR 3-93 as amended by RR 11-97 and RR 17-2001; 2.2.5 Exemption from donor's tax under Sec. 101 of the Tax Code, as amended; 2.2.6 Exemption from income tax and, consequently, from withholding tax of "de minimis" benefits under RR 2-98, as last amended by RR 5-2008; 2.2.7 Income tax exemption of retirement benefits under R.A. 7641 reasonable private benefit plans under R.A. 4917; 2.2.8 Tax exemption of separation benefits of employees under RMO 25-91; 2.2.9 Tax exemption of long term deposits; 2.2.10 Tax-deferred exchanges of property for shares under Section 40 (C) (2) of the Tax Code, as amended, under RR 18-2001, RMO 32-2001, and RMR 1-2001; 2.2.11 Transfer of property by a pre-need corporation to a trustee in accordance with SEC guidelines on the establishment of trusts by pre-need companies; 2.2.12 Tax consequences of exchanges of properties made in order to correct mistakes of fact relating to ownership of subdivision lots; 2.2.13 Topics covered by RMC 2-01 relative to the authority to sign VAT Exemption Certificate, Certificate of Income Tax Exemption, Certificate of Residency, and Certificate, of Registration as a Qualified Donee Institution; 2.2.14 Topics covered by RMC 10-01 pertinent to the authority to sign denial of claim for informer's reward under Section 282 of the Tax Code, as amended, and issuance of disbursement voucher for informer's reward; CAHTIS 2.2.15 VAT-zero rating of Freeport zones and Ecozone enterprises; 2.2.16 Tax exemption of foreign governments, embassies and their employees, as well as the authority to sign the VAT Exemption Certificate/VAT exemption identification Card issued to qualified foreign embassies and their qualified personnel pursuant to RMO 22-2004; 2.2.17 Tax exemption and issuance of Exemption Certificate of Securities Borrowing and Lending (SBL)/Securities Lending Transactions (SLT); 2.2.18 Tax exemptions/incentives to inventors pursuant to R.A. 7459; and 2.2.19 Authority to sign repetitive rulings where the BIR has maintained a consistent position on the issue raised. Repetitive rulings are those for which there have been at least five (5) established precedents. Copies of all rulings signed by the ACIR-Legal Service, in accordance with the provisions of this Section, shall be furnished to the Office of the DCIR-LIG and Office of the Commissioner, immediately upon issuance. 2.3. DCIR-Legal & Inspections Group. The DCIR-LIG is hereby authorized to sign rulings which grant any tax exemption and/or tax incentive, including tax treaty relief, and VAT rulings not covered by the aforementioned Section, which are clearly covered by established precedents, such as but not limited to the following: 2.3.1 VAT exemption pursuant to Section 109 of the Tax Code, as amended; 2.3.2 Tax exemption of Joint Ventures; 2.3.3 Tax exemption of International Agencies; 2.3.4 Tax treaty relief pursuant to the tax treaties or international agreements to which the Philippines is a signatory, except for those matters already delegated to the ACIR-Legal Service pursuant to the preceding Section; 2.3.5 Tax exemption of SPAV; 2.3.6 Change of accounting method; 2.3.7 Authority to issue Tax Credit Certificate (TCC) or Disbursement Voucher for Tax Refund in compliance with the decision of the Supreme Court, Court of Appeals, and Court of Tax Appeals which have become final and executory; 2.3.8 ITAD Rulings with precedents; 2.3.9 VAT Rulings with precedents; and 2.3.10 BIR Rulings with precedents. Copies of all rulings signed by the DCIR-LIG, in accordance with the provisions of this Section shall be furnished to the Office of the Commissioner immediately upon issuance. TADaES All rulings of first impression, as defined by RAO 1-03 shall be signed by the Commissioner, including rulings with precedents, in accordance with the Commissioner's discretionary power. Moreover, the Commissioner may, motu propio, reverse, modify, or revoke any such ruling issued within the delegated authority of the Regional Director, ACIR-Legal Service or the DCIR-LIG, at any time after its issuance if he determines that the same is not in accordance with established precedent rulings or pertinent tax laws and revenue issuances, but after due notice to the concerned taxpayers, and in accordance with Section 246 of the Tax Code, as amended, without prejudice, however, to administrative sanctions relative to such actions. The foregoing is without prejudice to the applicability of Revenue Bulletin No. 1-2003 No Ruling Areas-001. SECTION 3 . Rulings Issued Outside the Scope of Delegated Authority. Rulings involving tax exemptions, incentives or reliefs found to have been issued outside the scope of the delegated authority given to the aforementioned Officials are void ab initio, hence, considered invalid without need of revocation by the Commissioner. All rulings issued outside the scope of the delegated authority granted under this Circular and all other issuances on the delegation of authority issued by all previous Commissioners shall also be deemed invalid and without any force or effect, and thus, all the taxes and penalties that may be due thereon shall become due and payable from the time of the issuance of the unauthorized ruling. SECTION 4 . Resolution of Multiple Issues. The resolution of issues on request for ruling filed containing multiple issues falling under the jurisdictional authorities of two different Officials shall be vested upon the Higher Official. In cases where the request for ruling contains multiple issues which partly involve those with established precedents and partly those of first impression, the concerned subordinate Official having jurisdiction over those with established precedents is barred from resolving the issues under the authority of the Commissioner, otherwise, that portion of the ruling issued by said concerned subordinate Official shall be considered null and void. SECTION 5 . Interpretation of Claims for Exemptions. All claims and requests for tax exemptions, incentives, and reliefs must be duly represented in writing and strictly evaluated based on best evidence obtainable. Any doubt must be resolved in favor of the Government. SECTION 6 . Repealing Clause. Any and all issuances found to be inconsistent with any of the foregoing provisions of this Order are hereby deemed amended or modified accordingly. SECTION 7 . Effectivity Clause. This Order shall take effect immediately and shall remain in force until such time that the Commissioner issues an Order amending or modifying the scope of the authority delegated of the concerned Officials. CcAHEI (SGD.) SIXTO S. ESQUIVIAS IV Commissioner of Internal Revenue