CLARIFYING THE TAX TREATMENT OF INCOME EARNED FROM UNREGISTERED ACTIVITIES BY ENTERPRISES REGISTERED UNDER THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992 AND THE PHILIPPINE EC…
These Regulations are issued to
clarify the internal revenue tax treatment of income earned from
unregistered activities by enterprises that are registered with the
Subic Bay Metropolitan Authority, the Clark Development Authority, or
the Philippine Economic Zone Authority, as the case may be.
SECTION 1. Tax Treatment
— Income derived by an enterprise registered with the Subic Bay
Metropolitan Authority (SBMA), the Clark Development Authority (CDA), or
the Philippine Economic Zone Authority (PEZA) from its registered
activity/ies shall be subject to such tax
treatment as may be specified in its terms of registration (i.e., the 5%
preferential tax rate, the income tax holiday, or the regular income
tax rate, as the case may be). Nonetheless, whatever the tax treatment of said enterprise with respect to its registered activity/ies, income realized by such registered enterprise that is not related to its registered activity/ies
shall be subject to the regular internal revenue taxes, such as the 20%
final income tax on interest from Philippine Currency bank deposits and
yield or any other monetary benefit from deposit substitutes, and from
trust funds and similar arrangements, the 7.5% tax on foreign currency
deposits and the 5%/10% capital gains tax or ½ % stock transaction tax,
as the case may be, on the sale of shares of stock.
Income payments made by a registered enterprise to an entity in the Customs Territory shall not be subject to the preferential tax rates or tax exemption enjoyed by the registered enterprise. Thus,
dividends paid to the shareholders of a registered enterprise, interest
payments to creditors of such registered enterprise (regardless of any
tax provision for grossing up of taxes), and other such payments shall
be subject to the appropriate rate of tax imposable on the recipient of
such income.
SECTION 2 Repealing Clause
— Section 6 (f) of Revenue Regulations No. 1-95 and the provisions of
all other internal revenue issuances inconsistent herewith are hereby
repealed, modified or amended accordingly.
SECTION 3. Effectivity —
Except for the second paragraph of Section 1 which is a mere
reiteration of the law already enforced, these regulations shall take
effect after fifteen (15) days following publication in the Official
Gazette or any newspaper of general circulation in the Philippines.
Adopted: 14 Oct. 2002
(SGD.) JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(SGD.) GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue