BIR Ruling No. 356-2021

REPUBLIC OFTHE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

BIR Ruling No. 750-18 Sec. 24, RA 7916 3 i H 2

2/F MDD Bidg., 121 East Science Avenue Laguna Technopark Special Economic Zone, Binan, Laguna 4024 MR. AKINORI AIKI Deputy General Manager Marubun/Arrow (Phils.). Inc.

Dear Mr. Aiki:

This refers to your letter dated June 18, 2015 requesting for exemption from withholding tax on account of your registration with the Philippine Economic Zone Authority (PEZA).

Documents show that Marubun/Arrow (Phils.), Inc. ( the Company'") is a corporation duly organized and existing under the laws of the Philippines with office address at 2/F MDD Bldg., 121 East Science Avenue Laguna Technopark, Special Economic Zone, Binan, Laguna 4024. It is registered with the Securities and Exchange Commission under Company Registration No. A2001 t5192 on October 9, 200l and the Bureau of Internal Revenue under

Company is registered with the PEZA under Certificate of Registration No. Certificate of Registration No. ) dated November 15, 2001. Likewise. the D November 6. 2001 as an Ecozone Facilities Enterprise to engage in warehousing operations at Laguna Technopark-Special Economic Zone (LT-SEZ), particuiarly, in the importation, storage, safekeeping. just-in-time delivery of electronic and semiconductor goods, for sale. transfer or disposition to its export enterprise-clients.

Office ruled as follows: In reply. please be informed that in BIR Ruling No. 750-18 dated April 30, 2018, this

explicit in its provisions that the expanded withholding tax does not apply to be imposed on business establishments operating within the ECOZONE. (BIR Ruling No. 422-14 dated October 23. 2014) income payments to persons enjoying exemption from payment of income taxes enterprises are granted certain preferential tax treatment under Section 24 of and regulations to the contrary notwithstanding, no taxes, local and national shall pursuant to the provisions of any law, general or special. PEZA-registered Republic Act No. 79 16 which provides that any provision of existing laws, rules Section 2.57.5 (B) (2) of Revenue Regulations No. 2-98, as amended. is

(5%) of the gross income earned. in lieu of all taxes, national or local. SCPA Properties. Inc.. however, is liable to the payment of five percent

MARUBUN/ARROW (PHILS.). INC. Page 2 of 2

defines the term 'gross income' as follows: Further, Section 2 (nn), Rule I of the implementing Rules of RA No. 7916

is made for administrative expenses or incidental losses during a special tax due under Section 24 of the Act refers to gross sales and minus costs of sales or direct costs but before any deduction and gross revenues derived from business activity within the ECOZONE, net of sales discounts, sales returns and allowances given taxable period. The allowable deductions from "gross income" are specifically enumerated under Section 2, Rule XX of '(nn) "Gross Income" for purposes of computing the

these Rules.

tax rate of 5% to income derived from the registered activity by an ECOZONE enterprise. Thus, any income derived by a registered enterprise that is not related The definition of gross income' limits the application of the preferential

Regulations No. 20-02. such income derived from an unregistered activity shall be subject to regular to its registered activity is not entitled to the preferential tax rate of 5%. Instead internal revenue tax as. provided under Section I (lst par.) of Revenue

enterprise enjoying the 5% preferential tax incentive, all payments received by its registered activities are exempt from the withholding tax." it from its lessees, which are PEZA-registered export enterprises, derived from Accordingly, since SCPA PROPERTIES, INC. is a PEZA-registered

incentive from the PEZA, all payments received by it from its customers whether ECOZONE registered or customs territory enterprises in connection with its PEZA registered activities as provided under Section 11.1, Article XI of its Registration Agreement: registered enterprise enjoying incentive under a special law and the 5% preferential tax IN VIEW OF THE FOREGOING,since Marubun/Arrow (Phils.), Inc. is a PEZA

importation, storage, safekeeping. just-in-time delivery of electronic and semiconductor goods for sale, transfer, or disposition to its export enterprise- clients." "11.1 The REGISTRANT's warehousing operations shall be limited to

subject to tax pursuant to Section 57 of the Tax Code of 1997. as amended. are exempt from the withholding tax. However, Marubun/Arrow (Phils.). Inc. is constituted as withholding agent for the government. As such. it is required to withhoid the tax on compensation income of its employees or the withholding tax on income payments to persons

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

t3ea Very truly yours.

Commissioner of Internal Revenue CAESAR R. DULAY *