REVENUE MEMORANDUM CIRCULAR NO. 63-2023 issued on May 31, 2023 revokes and invalidated BIR Ruling Nos. 038-2001 and 046-1995, which ruled that Clark Development Corporation (CDC) is considered as a business enterprise because it was formed in accordance
with the Philippine Corporation Law and existing rules and regulations promulgated by the Securities and Exchange Commission and is performing activities that are proprietary in nature.
             It has been observed that, while it is true that CDC is a private corporation and performing activities that are proprietary in nature, the fact still remains that is a GovernmentOwned and Controlled Corporation (GOCC) entrusted with the responsibility of carrying out regulatory functions. As such, it does not stand on equal footing with business enterprises operating within Clark Special Economic Zone (CSEZ), thereby precluding it from claiming the same privileges available to them.
                   Despite being structured as a stock corporation, it is evident that CDC is a GOCC that
operates and performs as a regulatory agency. Thus, unless there is a law that expressly states
otherwise, CDC must be treated on par with other GOCCs regardless of its formation or the nature of its operations. Consequently, its income shall be subject to Income Tax provided in Section 27(C) of the Tax Code.
                   Assuming arguendo that CDC is correctly treated as a business enterprise, the BIR’s
position remains unchanged. It must be noted that upon passage of the Corporate Recovery and Tax Incentives for Enterprise Act (CREATE Law), Section 12(c) of Republic Act No. 7227, as amended, was repealed and the availment of fiscal incentives becomes limited only to business enterprises registered with Investment Promotion Agencies (IPAs).
                 Under the CREATE Law, IPAs and Registered Business Enterprises (RBEs) are two separate and distinct entities with different purposes and functionalities. RBE refers to any individual, partnership, corporation, Philippine branch of a foreign corporation, or other entity organized and existing under the Philippine laws and registered with an IPA whether inside or outside the zones, which are granted fiscal and/or non-fiscal incentives to the extent of their approved registered project or activity under the Strategic Investment Priority Plan (SIPP). On the other hand, IPAs refer to government entities created by law, executive order, decree or other issuance, in charge of promoting investments, granting and administering fiscal and/or non-fiscal incentives, and overseeing the operations of the different economic zones and freeports in accordance their respective special laws. Hence, it clear that, in the eyes of the Legislature, an entity may either be classified as an IPA or an RBE, but can never be both.
                     Section 293(H) of the Tax Code explicitly states that CDC is an IPA. While CDC is performing functions that are proprietary in nature, it is classified as an IPA as defined and contemplated under the CREATE Law, its Implementing Rules and Regulations (IRR) and other related rules and regulations. Therefore, CDC cannot avail of the fiscal and non-fiscal incentives which are exclusively granted to RBEs. In this regard, BIR Ruling Nos. 038-2001 and 046-1995 are hereby revoked and invalidated, and all revenue issuance inconsistent with this Circular are deemed repealed without prejudice to Section 246 of the Tax Code.