BIR Ruling No. 568-2017

V

REPUBLICOFFHE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANGE

Quezon City

RA 7916; RR No. 2-98 BIR Ruling No. 291-12

568-2017 7-0i

Energy Center, 34th Street Bonifacio Global City Building 5. DOE-PNOC Complex Taguig City PHILIPPINE ECONOMIC ZONE AUTHORITY

Attention: Justo Porfirio LL. Yusingeo and Administration/ Officer-In-Charge Deputy Director General for Finance

Gentlemen:

Productivity and Economic Zone, Inc.), for exemption from creditable withholding tax otherwise known as the "Special Economic Zone Act of 1995." request of SUNTRUST ECO'rOWN DEVELOPERS. INC.("SEDI")(formerly,Cavite on account of SEDI'S registration with PEZA under Republic Act (RA) No. 7916. This refers to your letter dated September 26, 2016, indorsing to this Office the

in Suntrust Ecotown Tanza to PEZA-registered enterprises, are not subject to the enterprise, the income payments to SEDI, for the sale of industrial and commercial lots creditable withholding tax. is a domestic company duly registered with the Securities and Exchange Commission Ecozone Developer/Operator shall entitle it to establish, develop, construct, administer assignment, or lease of area within the Ecozone shall be made only in favor of entities who are registered with PEZA pursuant to RA No. 7916; and that as a PEZA --registered of its Registration Agreement with PEZA provides that SEDI'S registration as an manage and operate a Special Economic Zone to be known as Cavite Productivity Economic Zone (now, Suntrust Ecotown Tanza); that SEDI is allowed to Icasc, sell assign, mortgage, transfer, or otherwise encumber the area designated as a Special Economic Zone or any right or interest therein, provided that the sale, transfer. (SEC) with Company Registration No. Developer/Operator of Suntrust Ecotown Tanza based on its amended Certificate of Registration No It is represented that SEDI, with Tax Identification Number issued by PEZA on December 14, 2012; that Article I (1) : that SEDI is a PEZA-registered

Suntrust Ecotown Developers, Inc. Page 2 of 3 558-2017 I

paying all iocal and national taxes and. in lieu thereof, are only subject to the 5% special tax on gross income, to be distributed in accordance with Section 24 of RA No. 7916. to wit: In reply, please be informed that PEZA-registered enterprises are cxempt from

Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof. five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as "SEC. 24. Exemption from National and Local Taxes follows:

(b) Iwo percent (2%) which shall be directly remitted by the (a) Three percent (3%) to the National Government; municipality or city where the enterprise is located. business establishments to the treasurer's office of the

XXXXXXXXX

(RR) No. 2-98, as amended, provides: Relative to the above-provision, Section 2.57.5(B)(2) of Revenue Regulations

"SECTION 2.57.5. Exemption from Withholding. - The withholding of creditable withhoiding tax prescribed in these Regulations shall not apply to income payments made to the following:

XXX XXX xXX

(B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. such as but not imited to the following:

XXX XXX XXX

Code of 1987 and RA 7227, as amended, respectively; (2) Corporations registered with the Board of Investments, Philippine Export Processing Zones and Subic Bay Metropolitan Authority enjoying exemption Republic Act No. 7916 and the Omnibus Investments (Underscoring supplied) from the income tax pursuant to E0 226, as amended.

taxes pursuant to the provisions of any law, general or special. Accordingly, since SEDI No. 7916. its revenues derived directly in connection with its registered activity as apply to income paynents to persons enjoying exemption from payment of income is an enterprise enjoying exemption from the payment of income tax pursuant to RA Based on the foregoing, it is clear that the creditable withholding tax does not

Sumtrust Ecotown Developers, Ine. Page 3 of 3 t: :5&-2017 12~7-2017

emphasized. however. that with regard to SEDI'S sale, transfer, assignment, or lease of of PEZA-registered entities. (BIR Ruling No. 291-2012 dated April 25. 2012) Ecozone Developer/Operator of Suntrust Ecotown Tanza, shall not be subject to the creditable withholding tax prescribed under RR No. 2-98. as amended. It must be commercial or industrial lots within the Ecozone, the same shall be made only in favor

for the government if i acts as employer and any of its employees received to individuals or corporations subject to the withholding taxes at source as required implemented by RR No. 2-98. as amended. compensation incomc subject to compensation withholding tax. or if it makes payments under Chapter XIII and Section 57 of the Tax Code of 1997, as amended and It should be understood that SEDI shall be constitutcd as a withholding agent

days from the deadiine for filing of tax returns and payment of taxes. its tax returns and pay its tax liabilities. on or before the deadline as provided under the of the BIR. Furthermore. it shall file with PEZA a compiete annual tax incentives report of its income-based tax incentives, VAT and duty exemptions, deductions, credits or exclusions from the tax base, as may be provided under RA No. 7916, within thirty (30) 1997 Tax Code. as amended. using the electronic system for filing and payment of taxes Pursuant to Section 4 of Republic Act (RA) No. 10708', SEDI is required to file

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

Very truly yours.

1eusawMe

Commissioner of Internal Reveng CAESAR R. DULAY 011669

K-1

: Au Act Enhancing Transparency in the Management and Accounting of Tax Incentives Administered by Investment Promotion Agencies.