THE Bureau of Internal Revenue (BIR) issued BIR Ruling No. 014-2012 dated Jan. 4, 2012 reversing its previous ruling on items deductible from the gross income of companies registered with the Philippine Economic Zone Authority.
Pursuant to Section 24 of Republic Act (RA) No. 7916, the preferential tax rate of 5 percent is imposed on the gross income earned by a PEZA-registered enterprise [BIR Ruling No. 117-99 dated Aug. 10, 1999]. Gross Income is in turn defined in Section 2 (nn), Rule I of the “Rules and Regulations to Implement Republic Act No. 7916, otherwise known as the Special Economic Zone Act of 1995” (PEZA Rules), as follows:
“Gross Income” for purposes of computing the special tax due under Section 24 of the Act refers to gross sales or gross revenues derived from business activity within the ECOZONE, net of sales discounts, sales returns and allowances and minus costs of sales or direct costs but before any deduction is made for administrative expenses or incidental losses during a given taxable period. The allowable deductions from “gross income” are specifically enumerated under Section 2, Rule XX of these Rules.
Section 2, Rule XX of the PEZA Rules enumerates the allowable deductions for the purpose of computing the preferential tax rate of 5 percent on gross income of PEZA-registered companies.
In interpreting the scope of Section 2, Rule XX of the PEZA Rules, however, the BIR previously had the occasion to rule that the allowable deductions enumerated therein are not exclusive; meaning, as long as the costs can be attributed in producing the product, they are allowed as deductions for purposes of computing the 5 percent final tax [BIR Ruling No. DA-(C-191) 486-09 dated Sept. 2, 2009].
BIR Ruling No. 014-2012 dated Jan. 4, 2012, however, all of a sudden reversed all of the BIR’s previous rulings by stating that the enumerations in Section 2, Rule XX of the PEZA Rules are exclusive under the maxim expression unius est exclusion alterius, or the mention of one thing implies the exclusion of another thing not mentioned.
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