BIR Ruling No. 55-2020

BUREAU OF INTERNAL REVENUE REPUBLICOF HE PHILIPPINES DEPATMEI T OF FINANCE Quezon City

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

JAN 2 4 2020 INV-001-2020

Barba Building, Km. 104.5 McArthur Highway Cutcut I, Capas, Tarlac BARBALITE TECHNOLOGIES

Gentlemen: Attention : PERCIVAL G. BARBA General Manager

dated May 20, 2015 endorsing the request of Inventor Percival G. Barba for tax exemption under Republic Act (R.A.) No. 7459, otherwise known as the "Inventors and Inventions Incentives Act of the Philippines" This refers to the letter of Filipino Inventors Society Producer Cooperative

the following product: Records show that Inventor Percival G. Barba is the registered patent holder of

Solar Powered Road Marker Utility Model Registration No. March 28, 2011 Date Issued Date of First Sale October 30, 2013

No. 2015-003 dated March 19, 2015. Screening Committee has evaluated and recommended that the above-mentioned patented utility model is eligible for the tax incentives pursuant to Resolution No. CC commercially produced and distributed by Barbalite Technologies (TIN Dayap Street, Palmera Homes I, Novaliches, Sta. Monica, Quezon City; and that the that Mr. Percival G. Barba is an accredited member of the Filipino Inventor Society Producer Cooperative; that the above-mentioned patented utility model is being , a single proprietorship owned by Mr. Percival G. Barba located at B10 L20

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

develop and accelerate commercialization of technologies developed "SECTION 6. Tax Exemption. - To promote, encourage.

by local researchers or adapted locally from foreign sources including inventions, any income derived from these technologies shall be

the date of the first sale, subject to the rules and regulations of the exempted from all kinds of taxes during the first ten (l0) years from Department of Finance. Provided, that this tax exemption privilege

Page 2'of 3 Percival G.Barba JAN 2 4 2020 IN-001-2020

pertaining to invention shall be extended to the legal heir or assignee upon the death of the inventor.

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

this case, Mr. Percival G. Barba, as a sole proprietor doing business under the name of Barbalite Technologies and not for any other entity that commercially produces and In other words, the tax exemption under the aforesaid Section is for the inventor, in distributes the invented product. which is indicated above opposite each product invented, provided that said exemption privileges pertaining to the invention shall be extended to the legal heir or assignee upon the death of the inventor. (BIR Ruling No. 328-12 dated May 11, 2012) during the first ten (10) years from the date of the first sale on a commercial scale The said exemption can be availed of by the inventor, Mr. Percival G. Barba.

Department of Finance denying the appeal of an inventor relative to his tax exemption privileges, clarifies that the 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, Mr. Percival G. Barba is still subject to the following taxes:

1.20% final withholding taxes on interest from currency bank deposit 2 Capital gains tax on sale of shares of stock prescribed under Section and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements and fifteen (15%)' final withholding tax on interest from foreign currency deposit:

24(C) of the Tax Code of 1997;

3. Capital gains tax on sale of real property prescribed under Section

24(D) of the Tax Code of 1997:

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

5 Value-added tax (VAT) on the gross receipts/revenues derived from activity such as interest, royalties, prizes, winnings and dividends;

the sale of the saidinvention products, and also VATfor which theinventor is 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:

6. Other percentage taxes under Title V of the Tax Code:

Excise taxes directly payable in connection with the sale of

invention products; and 8. Documentary stamp tax on documents, instruments and papers.

Republic Act No. 10963 increased the tax rate from 7.5% to 15% effective January 1. 2018.

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

April 15 of each year for the preceding calendar year an Annual Information Return with the Revenue District Officer having jurisdiction over his place of business. Finally, Mr. Percival G. Barba shall prepare and file in triplicate on or before

enforcement officers for purposes of ascertaining whether he has been complying and his tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as other pertinent records shall be subject to periodic examination by our revenue with the conditions under which he has been granted tax exemption or tax incentives amended. It is, of course, understood that Mr. Percival G. Barba's books of accounts and

However; if upon investigation, it will be disclosed 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.

Very truly yours,

1ee3aMa

CAESAR R. DULAY Commissioner of Internal Revenue

K-1-JRC/JAC 032359