BIR Ruling No. 523-2017

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

amended: RA No. 7916: RR No..2-98 BIR Ruling No. 320-{T Secs. 57 "&"109. NIRC of "1997. as BIR Ruling No. 117-99: VAT Ruling No. 076-02 11-9-20 17 3

OHMORI DEVELOPMENT CORP. +5 Floor TGU Tower, Cebu IT Park. Apas. Cebu City 6000

Attention: CRYSTAL CHLOE ONG-CHUA Chief Finance Officer Gentlemen:

sale of land by Phiiippine Economic 7one Authority (PEZA)-registered CEBU LIGHT to the creditabic withholding lax. value-added tax and documentary stamp tax. INDUSTRIAL PARK,INC. (CLIP) to OHMORI DEVELOPMENT CORP. is not subject This refers to your letter dated November I1. 2015. requesting for confirmation that the

it is a PEZA-registered Ecozone Developer/Operator under Certificate of Registration No. domestic corporation registered with the SEC under Registration Nc. Zone known as the Cebu Light Industrial Park-Special Economic Zone (SEZ)': that as an entities or entities entitled to be registered with PEZA: and that it is entitted to the fivc percent (RPI) on land owned by the Ieveloper. devetopment. construction, administration. management and operation of a Special Economic Ecozone Developer/Operator CLIP is authorized to lease and sell properties to registered (5%) Special Tax on gross incomc in licu of national and local taxes except Real Property Tax It is represented that CLIP, with Taxpayers' identification No. dated 21 July (998: that its registered activity, consists of the establishment. Is a that

Registration No. construction of two (2). 2-storey buildings with a combined gross floor area of 35.250 square meters. more or less, on two parcels of lot with an aggregate area of 28.695 square meters located at Lots 5 and 6. Block 3. Cebu Light Industrial Park-SE:7.. for lease/sale to PE:ZA- registered cnterprises: and that it is exempt"from the payment of all national and tocal taxes and in tieu thereof. it shall pay 5% final tax on gross income derived from its sale/leasing Registration No. activitiest. Identification No. It is atso represented that OHMORI DEVELOPMENT CORP. with Taxpayers dated 20 December 2012: that its rcgistered activity consists of the that it is a PEZA-registered enterprise under Ccrtificate of is a domestic corporation registered with the SEC under

Cebu Light Industrial Park. Barrio of Basak, City of Lapu-I.apu. Istar.d of Mactan. particularly described as follows: CLIP soid to OHMORI DEVELOPMENT CORP. two parcels of Iand situated in

t PE7A-ERD Form No. 2 Registration Agreement dated December 21. 2012 hetween P1:/A and Ohmori Des elopment Corp. certiticate No

2C7

OHMORI DEVELOPMENT CORP. I

Total Area Transfer Certificate of Title No. Lot 6 Block 3 Cebu Light Industrial Park Lot 5 Block 3 Cebu Tight Industrial Park Address 28,695.sq m. 12.628 sq.m. 16.067 sq.m. Area

enjoying a preferential tax rate of 5% in lieu of paying ail national and local taxes, to OHMORI consequently from withholding tax as well as from value-added tax and documentary stamp opinion that the sale of real property by CLIP, a PEZA-registered EcoZone Developer/Operator DEVELOPMENT CORP.. another PEZA-registered entity, is exempt from income tax and Based on the foregoing representations, you now request for confirmation of your

tax.

the former's registered activity. is exempt from income tax. value added tax and documentary stamp tax. pursuant to Section 24 of Repubiic Act No. 7916. as amended. which provides: DEVELOPMENT CORP.'of two parcels of land within the Cebu Light Industrial Park. being In reply thereto. please be informed that the sale by CLIP to OHMORI

earned by all business enterprises within ihe ECOZONF"shall"he paid and within the ECOZONE. In lieu thereof. five percent (5%) of the gross income Code. - -- Except for real property tuxes on tand owned hy developers. no taxes. tocal and nutional, shall be imposed on business establishnments operating remitted us follows. "SECTION 24. Exemption from Taxes Under the National Internal Revenue

(a) Three percent (3%) to the National Government.

(h) Two percent (2%) which shall be directly remitted by the business the enterprise is located. " establishments to the treasurer's office of the municipality or city where

as amended. implementing Section 57 (B) of the Tax Code of 1997. as amended. which states: expanded withholding tax pursuant to Section 2.57.5 of Revenue Regulations (RR) No. 2-98. DEVELOPMENT CORP., the income payment by the latter shall also be exempt from Since CLIP is exempt from income tax on its sale transaction with OHMORI

pay'ments made to the following: withholding tax prescribed in these Regulations shall not upply to incone "SEC. 2.57.5. Exemption from Withholding. - The withholding of creditahle

XXX xXX XXX

(B) Persons enjoying exemption from payment of income taxes pursuunt to the provisions of amy law, general or special, such as hut not linited to the following.

XXX XXX XXX

(2) Corporations duly registered with the Board of Investments, Metropolitan Authority enjoying exemption from the income tux pursuant to E.0. 226. as amended. R.4. 7916 und the Omnibus Investnient Code of 1987 and R.A. 7227. as amended. Philippine respectivelv: Export Processing Tones amd Suhic.Bay

XXX XXX .XXX *

PAGE 2 OF 3

OHMORI DEVELOPMENT CORP. t523-2017 11-9-2017

to Section I (A) of Rule XIV, Rules and Regulations to Implement RA 7916. income from said activities, in lieu of all taxes. including value-added taxes (VAT) pursuant registered ccozone developer/operator. is exempt from income tax/creditable withholding tax capitai gains tax. value added tax and all other national internal revenue taxes. In lieu thereof. the ccozone developer/operator is liable to pay the five (5%) preferential ratc on is gross Such being the case. development. opcration, sale or lease of lots by the PE/A

pursuant to Section 109 (K) of the Tax Code of 1997, as amended by Republic Act No. 9337. and in relation to Section 24 of RA 7916, as amended. which provides: Moreover, the law provides that the same sale transaction is exempt from VAl

"Sec. 109. Exempt Trunsuctions. - (1) Subject to the provisions of Suhsection (2) hereof. the following trunsactions shall he exempt from the vulue-udded tux.

(K) Transactions which ure exempt under international ugreemenis to which the Philippines is a signatory or undter special lanv's. except those under Presidential Decree No. 529:

likewise a PEZA-registered enterprise. but is subject to the 5% preferential tax in licu of ail its real properties in favor of OHMORI DEVELOPMENT CORPORATION. which is taxes (VAT Ruling No. 076-02 dated Novemher {I. 2002). Thus, CLIP, being a PFZA registered enterprise, is not subject to VAT on the sale of

the documentary stamp tax herein imposed, the other party thereto who is not exempt shall be the one directiy iiable for the tax. it should be noted that both companies bcing PE7A- registered CLIP and OHMORI DEVELOPMENT CORP. are excmpt from the payment of documentary stamp tax on their transaction. (BIR Ruling No. 008-99 datedJanuarv 19. 1999) 1997, as amended, that whenever one party to the taxable document enjoys exemption from Lastly. whiie it is provided in Section 196 in relation lo Section 173 of the Tax Code of

property by CLIP, a PEZA-registered Ecozone Developer/Operator enjoying a preferential tax rate of'5% in lieu of paying alt national and loca1 taxes. to OHMORI DEVELOPMENT withholding tax as well as from value-added tax and documentary stamp tax. CORP.. another PEZA-registered entity. is exempt from ineome tax and consequcntly from In view of the foregoing, this Office hereby confirms your opinion that the sale of real

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

Very truty yours.

M

Commissioner of Internal Revenue CAESAR R. DULAY W 011068 K-I-L.M.AT

PAGE 3 OF 3