BIR Ruling

July 3, 1967 1st Indorsement Respectfully returned to the Honorable, the Secretary of Finance S. No. 589 with the following comment. cdtech The bill seeks to amend Sec. 10 of R.A. No. 4093, otherwise known as the "Private Development Banks' Act" by providing for the exemption of said banks from all taxes, charges and fees, except the compensating tax and tariff duties if their net assets do not exceed P10,000,000.00 in the case of Class C banks, P20,000,000.00 in the case of Class B banks, and P30,000,000.00 in the case of Class A banks, determined as of the 31st of December of each year; but should their net assets exceed said limits, they shall be liable to taxes for the following year at the ratio which such excess bears to their total net assets. Section 4 of the Act requires a paid-up capital of only not less than P4,000,000.00 for Class A banks, P2,000,000.00 for Class B banks and P1,000,000.00 for Class C banks. Considering that the required capitalization is very little, it is feared that the exemption of said banks might drag on indefinitely, for even on the assumption that said banks will not declare dividends, it will take them years to exceed the net assets limits provided for in the proposed bill. This Office believes that the existing basis for exemption as contained in Section 10 of the Act is adequate enough to enable these banks to establish an adequate financial foundation. In view thereof this Office cannot favorably recommend the passage of the bill. aisadc (SGD.) MISAEL P. VERA Commissioner of Internal Revenue