BIR Ruling No. 508-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

RA 7459; RR 19-93

BIR Ruling No.01 1-16 BIR Ruling No.328-12

NV-0508-Z020

SEP 0 9 2020

Dear Mr.

This refers to your letter dated January 7, 2019, with attachments, requesting for tax

exemption as a registered inventor of patented product, under Republic Act (RA) No. 7459,

otherwise known as the Inventors and Inventions Incentives Act of the Philippines.

Records show that you are an accredited member of the Filipino Inventors Society (FIS)

and a registered|patent holder of the following products:

Molded Coarse Particle Product with Utility Model Patent No. August 17, 2012 Date Issued October 12, 2016 First Sale Date of

Cast Paper-based Reinforcement

Cast Stone Product with Embedded July 22, 2005 October 12, 2016

Surface Accentuations

The above-mentioned patented inventions are being manufactured and marketed in a

commercial scale by Natures Legacy Eximport, Inc.

The Technology Application and Promotion Institute (TAPI) Screening Committee has

evaluated and recommended that the above-mentioned patented inventions are eligible for the tax

incentives pursuant to its Resolution Nos. 11,2018 as confirmed by Confirmation Certificates Nos. dated June 29, 2017 and 2018-01 dated April , respectively

issued by Mr. Romulo T. Aggangan, Chairperson of TAPI Screening Committee.

In support of your application for tax exemption, you submitted the following:

Certified true copy of Letters Patent Nos. dated August 17,2012 and

dated July 22, 2005;

Certiricauou of Membership of Inventor and Endorsement of Invention for Tax 2

Exemption under RA No. 7459 dated October 17, 2018 issued by FIS;

iNV-0508-2020 SEP 0 9 2020

Mr. Pedro H.Delantar Page 2 of 3

3 4 Certified true copy of DOST TAPI Confirmation Certificates Nos. Invoice INos. 29, 2017 and 2018-01 dated April 11 2018 and certified true conv of TAPI Screening BIR Certificate of Registration No. Committee Resolution Nos. 2018 Sr and dated June 29, 2017 and and Purchase Order Nos. dated June25,1999; and dated April 11, dated June

and Joooc, respectively, as proof of first sale on commercial scale.

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

"Section 6. Tax exemption. -- to promote, encourage, develop and accelerate commercialization of technologies developed by local researchers or adapted locally from foreign sources including inventions, any income derived from these technologies shall be exempted from all

subjectto the rules and regulations of the Department of Finance: provided, that this tax exemption privilege pertaining to invention shall be kinds of taxes during the first ten (10) years from the date of the first sale,

extended to the legal heir or assignee upon the death of the inventor.

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

You canavail of said exemption during the first ten (10) years from the date of the first

sale on a commercial scale, provided that this exemption/privilege pertaining to the invention shall be extended to your legal heir or assignee upon your death. This exemption does not extend to any other entity thatcommercially produces and distributes your invented product. (BIR Ruling No. 328-12 dated May 11,2012)

Case No. 03-G-422 dated February 2, 2004, affirming the finding of the Department of Finance It is important to note that the Final Resolution of the Office of the President (OP), in OP

denying the appeal of an inventor relative to his tax exemption privileges granted by this office,

clarifies that the tax exemption granted by the first paragraph of Section 6 of RA No. 7459 refers

to income tax only.

In effect, you are still subject to the following taxes:

20% final withholding taxes on interest from currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements and 15%l final withholding tax on interest from foreign currency deposit;

2. Capital gains tax on sale of shares of stock prescribed under section 24 (C) of the Tax

Code of 1997, as amended;

3. Capital gains tax on sale of real property prescribed under section 24 (D) of the Tax Code of 1997, as amended;

1 Increased from 7-1/2% to 15% as amended by TRAIN Law.

1Ny-0508-2023 SEP 0.9 2020

Mr. Pedro H. Delantar

Page 3 of 3

4 Income tax on income not arising from the inventor's productive activity such as

interest, royalties, prizes, winnings and dividends;

said invention products, and also VAT for which the inventor is not directly liable, which may be shifted to him as part of the cost of goods sold or for services rendered; e.g.,[VAT on his purchases of raw materials, supplies and equipment/machinery, Value-added tax (VAT) on the gross receipts/revenues derived from the sale of the

and

6 Other percentage taxes under Title V of the Tax Code of 1997, as amended;

Excise taxes directly payable in connection with the sale of invention products; and

8. Documentary stamp tax on documents, instruments and papers.

Moreover, you shall register with the proper Revenue District Office of the Bureau of Internal Revenue 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, as amended.

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, 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, as amended.

This ruling is being issued on the basis of the foregoing facts as represented. However, if

upon investigation, it will be ascertained that the facts are different, then this ruling shall'be

considered null and void.

Very truly yours,

1oesaa

CAESAR R. DULAY Commissioner of Internal Revenue

K-1 036592