C00502-2019

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATION CODE
AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported)
Jan 29, 2019
2. SEC Identification Number
154675
3. BIR Tax Identification No.
948-229-000
4. Exact name of issuer as specified in its charter
CEBU AIR, INC.
5. Province, country or other jurisdiction of incorporation
Cebu City, Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
2nd Floor Doña Juanita M Lim Building, Osmeña Boulevard, Capitol Site, Cebu City Postal Code 6000
8. Issuer's telephone number, including area code
(632) 802-7000
9. Former name or former address, if changed since last report
N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common 601,498,740
11. Indicate the item numbers reported herein
9

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

Cebu Air, Inc.CEB

PSE Disclosure Form 4-13 - Clarification of News Reports References: SRC Rule 17 (SEC Form 17-C) and
Section 4.4 of the Revised Disclosure Rules

Subject of the Disclosure

Clarification of news article
Source BusinessWorld
Subject of News Report CTA affirms cancellation of P1.8-B tax assessment vs Cebu Air
Date of Publication Jan 29, 2019
Clarification of News Report

We refer to your letter dated January 29, 2019 with respect to the news article entitled "CTA affirms cancellation of P1.8-B tax assessment vs Cebu Air" published in the January 29, 2019 issue of BusinessWorld. The article reported in part that:

“THE Court of Tax Appeals (CTA) upheld an earlier decision cancelling the P1.8-billion tax assessment against Cebu Air, Inc. over improperly accumulated earnings tax for 2010.

In a resolution dated Jan. 23, the CTA Special Second Division affirmed its Sept. 27, 2018 decision cancelling and withdrawing the tax assessment issued by the Bureau of Internal Revenue (BIR).

The CTA Special Second Division said the arguments raised by the BIR in its motion for reconsideration were ‘a mere of the same facts and issues’ which were already discussed in its previous decision.

‘Considering the foregoing, there is no cogent reason to disturb the assailed Amended Decision,’ the CTA ruled.

In its appeal, the BIR said Cebu Air had ‘failed to prove it declared and paid cash dividends to its shareholders.’ It added that retained earnings should only be up to 100% of the paid-up capital to consider it ‘reasonable’ for the needs of business.

The BIR also said a compromise penalty should have been imposed on the operator of Cebu Pacific.

According to the Tax Code, improperly accumulated earnings tax should apply to corporations that have avoided income tax ‘with respect to its shareholders… by permitting earnings and profits to accumulate instead of being divided or distributed.’

In the amended decision last September, the CTA said that Cebu Air sufficiently proved that it declared cash dividends within one year from the close of 2010, through the submission of audited financial statements, monthly remittance return of final income taxes withheld, among others.

‘Taking into consideration the cash dividends declared seasonably within the 1-year period from the end of the taxable year being assessed (i.e., CY 2010), petitioner will no longer have improperly accumulated earnings for TY 2010,’ the court said.

The BIR had argued that the additional paid-in capital (APIC) is part of paid-up capital and that the amount that a corporation should retain should only be up to 100% of its paid-up capital or the amount representing the corporation’s shares of stocks. Any amount that exceeded 100% of the paid-up capital is considered unreasonable for the need of the business and should be subjected to tax.

The CTA, however, emphasized its decision that the additional paid-in capital, the amount of capital in excess of the par value of the company’s shares, ‘are not earnings/profits of a corporation generated from the normal and continuous operations of the business.’

. . . .”

Cebu Air, Inc. confirms the information stated above.
Other Relevant Information

N/A
Filed on behalf by:
Name Rosalinda Rivera
Designation Corporate Secretary