BIR Ruling No. 537-2017

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

T:.. Quezon City

RA 7459: RR 19-93 BIR Ruling No. 328-12

: 537-07 20-17

Mr. JAIME JACINTO ESTEBAN

J.J. ESTEBAN ENTERPRISES Proprietor

95 Mahariika Hi-way, Daan Sarile Cabanatuan City, Nueva, Ecija

Dear Mr. Esteban:

under R.A. No. 7459, otherwise known as the Inventors and Inventions Incentives Act of the Philippines. This refers to your letter dated December 18. 2015, requesting tax exemption

following products: Records show that you are the inventor and the registered patent holder of the

2. Rotary Drier 3.A Multi-purpose I INVENTIONS A Multi-Purpose Grinder REGISTRATION NO. September 2005 September 2013 September ISSUED DATE 23, 2 2 May 7,2015 June 19.2013 September FIRST SALE DATE OF I 6.

Roasting. Mixer for Mixing and Removing Seed Coats of Grains 2013 2014

that you are an accredited member of the Filipino Inventors Society Inc.: that the

Screening Committee has evaluated and recommended that the above-mentioned above-mentioned patented inventions are being commercially produced and distributed by J.J. Esteban Enterprises, a single proprietorship owned by you and is located at 95 Maharlika Hi-way, Daan Sarile, Cabanatuan City; and that the patented inventions are eligible for the tax incentives pursuant to Confirmation Certificate No. 2015-004 dated November 23, 2015

In reply, please be informed that Section 6 of R.A. No. 7459 provides:

Jaime J. Esteban -017 OX17 Page 2 of 3

pertaining to invention shall be extended to the legal heir or assignee upon the death of the inventor. exempted from all kinds of taxes during the first ten (10) years from the date of the first sale. subject to the rules and regulations of the Depariment of Finance: Provided. that this tax exemption privilege develop and uccelerate commercialization of technologies devetoped by local researchers or adapted locally from foreign sources including inventions, any income derived from these technologies shall be "SECTION 6. Tax Exemption. -- To promote. encourage,

exempt from payment of license, permit fees. customs duties and charges on imports. "The technologies, their manufacture or sale, shall also be

pertaining to the invention shall be extended to your legal heir or assignee upon your ten (10) years from the date of the first sale on a commercial scale, which is indicated above opposite each product invented, provided that said exemption privileges death. (BIR Ruling No. 328-12 dated May 11, 2012) The said exemption can be availed of by you as the inventor during the first

inventor, in this case you, Mr. Jaime J. Esteban. doing business under the name of J.J. Esteban Enterprises and not for any other entity that commercially produces and distributes the invented product. In other words. the tax exemption under the aforesaid section is for the

Department of Finance denying the appeal of an inventor relative to his tax exemption privileges granted by this Office, clarifies that the only tax exemption granted by the first paragraph of Section 6 of RA 7459 merely refers to income tax. (OP), in OP Case No. It is important to note that the Final Resolution of the Office of the President dated February 2, 2004, affirming the finding of the

In effect, you, Mr. Jaime J. Esteban are still subject to the following taxes:

3. Capital gains tax on sale of real property prescribed under Section 24(D) 4. Income tax on income not arising from the inventor's productive activity 2 1. 20% final withholding taxes on interest from currency bank deposit and 5 Capital gains tax on sale of shares of stock prescribed under Section 24(C) Value-added tax (VAT) on the gross receipts/revenues derived from the funds and similar arrangements and 7 1/2% final withholding tax on such as interest, royalties, prizes. winnings and dividends: yield or any other monetary benefit from deposit substitutes and from trust interest from foreign currency deposit: of the Tax Code of 1997; of the Tax Code of 1997;

6. Other percentage taxes under Title V of the Tax Code; not directly liable, e.g., VAT on his purchases of raw materials, supplies and equipment/machinery, which may be shifted to him as part of the cost of goods sold or for services rendered: sale of the said invention products. and also VAT for which the inventor is

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7. Excise taxes directly payable in connection with the sale of invention

8. Documentary stamp tax on documents. instruments and papers. products:and

Moreover. you, Mr.Jaime J.Esteban shall register with the proper Revenue District Officer as a withholding agent and as such shall withhold taxes (1 on wages/salaries of your employees; and (2 on your income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57(B of the Tax Code of 1997.

Finallyyou, Mr.Jaime J.Esteban shall prepare and file in triplicate on or before April 15 of each year for the preceding calendar year an Annual Information Return with the Revenue District Officer having jurisdiction over your place of business.

It is, of course, understood that your books of accounts and other 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 of 1997.

This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different. then this ruling shall be considered null and void.

Very truly yours.

1w anly CAESAR R. DULA

K-1-JRC Commissioner of Internal Revenue 011237