BIR Ruling No. 66-2018

, REPUBLIC OF THE PI]NIPPINES pgplnrrrl'reNT'oF FINANcE BUREAU qE INTERNAT REVENUE -'::;'' --:;i':""' qUeZOn'CitY RA 7916; Revenue Regulations (RR) No. 2-98 BIR Ruline No. 291-2012 ffi55-mtB t-"5-"o76 UNITED COCOI{UT CHEMICALS, INC. CAIP-SEZ, Brgy. San Antonio San Pascual, Batatgas 4204 Gentlemen: : Attention: ffi This refers to your letters dated October 29,2015 and August 16,2016 requesting, on behalf of UNITED COCONUT CHEMICALS,INC., exemption from expandedwithholding tax (EWT) sn account of its registrationwiththe Philippine EconomicZone Authority (PEZA). It is represented that LINITED COCONUT CIIEMICALS, INC., with Tax ldentifi cation Number (TIN) , is a domestic corporation duly registered with ; that it is the Securities and Exchange Commission (SEC) with SEC RegistrationNo. registered with the PEZA as Ecozone Facilities Enterprise with Registration Certificate No. dated August 18,2014; that pursuant to its Registration Agreement and Supplemental Agreement with PEZA dated August 18,2014 and June 25,2015 respectively, its registered activities consist of: (a) leasing-out to PEZA-registered enterprises ,its existing facilities constructed within the 92,565 squa.re meter lot inside the Cocochem Agro-Industrial Park - Speciatr Economic Zone (CAIP-SEZ), Barangay San Antonio, San Pascual, Batangas, and (b) operating and maintaining its jetty pier and,Batangas Tank Farm (BTF)rat the CAIP-SEZ,for lease to PEZA-registered enterprises; and that based on the PEZA Certification dated August 23,2016, UNITED COCONUT CHEMICALS, D{C. is entitledto the 5% Special Tax on Gross Income derived from the lease/sale of said existing facilities to PEZA-registered enterprises under Section 24 of Republic Act (RA) No. 7916, as amended by RANo. 874$ and in accordance with Rule )O( of the Rules and Regulations to Implement RA 7916. In reply, please be informed that Section 2.51.5(B)(2) of Revenue Regulations (RR) No. 2-98, as amended by RR No. 14-02, provides: "SECTION 2.57.5. Exemption from Withholding. - The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to thefollowing: xxx xxx xxx (B) Persons enjoying exemptionfrom payment of income taxes pursuant to the pirovisions of any law, general or special, such as but not limited to the following: xxx xxx xxx (2) Corporations registered with the Board of Investments, Philippine Export Processing Zoines and Subic Bay Metropolitan Authority enjoying exemptionfromthe income taxpursuant to EO 226, as amended, Republic Act No. 7916 and the Omnibus

UNITED COCONUT CHEMICALS, INC. #o65-nfi t-25-zo:.9 Investments Code of 1987 and RA 7227, as amended, espectively". Based on the foregoing, Section 2.57.5(B)(2) of RR No. 2-98, as amended, is expiicit in its provisions that the. exp^anded withhold^ing tax does not apply to income payments to persons enjoying exemption from payrnent of income taxes pursuant to the provisions of any law, general or special. Accordingly, since t}I.{ITED COCONUT CHEMICALS,INC. is a PEZA-registered enterprise, income payments made to it with respect to its PEZA-registered activitiesof leasing-out to PEZA-registered enterprises its existing facilities constructed within the 92,565 sqru.re meter lot inside the Cocochem Agro-Industrial Park - Special Economic Zone (CAIP-SEZ), Barangay San Antonio, San Pascual, Batangas, and operating and maintaining its jetty pier and Batangas Tank Farm (BTF) at the CAIP-SEZ, for lease toPEZA- registered enterprises shall not be subject to the expanded withholding tax prescribed in RR No. 2-98, as amended. (BIR Ruling No. 291-2012 dated April 25, 2012) It must be emphasized, however, that UNITED COCONUT CHEI{ICALS, INC. is constituted as withholding iigent for the government. As such, it is required to witlrhold the tax on compensation income of its employees or the withholding tax on income payments to persons subject to tax pursuant to Section 57 of the National Internal Revenue Code of t997, as amended . Moreover, pursuant to Section.4 of Republic Act (RA) No. 107081, LTNIf,F.D COCONUT CHEMICALS, INC. is required to file its tax retums and pay its tax liabilities, on or before the deadline as provided under the National Internal Revenue Code of 1997, as amended, using the electroniC system for filing and payment of taxes of the Brueau of Internal Revenue (BIR). Furthermore, it shall frle with PEZA a complete annual tax incentives rep-ort of its inpome-based tax incentives, value d00ea tax and duly exemptions, dedrrctions, credits or excldsions from the tax base, as may be provided under RA No. 7916, within thkfy (30) tll days from the deadline for filing of returns and payment of taxes. This ruling is being issued on the basis of the foregoing lacts asrepresented. However, if upon investigati,on, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, JWq^A:fEV ' CAESAR R DULAY Commissioner of Internal Revenue 0 1 2.9 0 &x-t-tmtr { I An Act Enhancing Transparency in the Management and Accounting of Tax Incentives Administered by Investment Promotion Agencies.