BIR Ruling

May 13, 1969 1st Indorsement Respectfully returned to the Honorable, the Secretary of Finance, the within papers bearing on the request of the rural bankers for a Presidential directive exempting all rural banks from filing corporate income tax returns and the payment of income tax. The Honorable, the Secretary of Justice, had already rendered an opinion that rural banks under the amendment to Section 24 of the Tax Code by Republic Act No. 5431 are subject to income tax. A copy of the opinion of the Secretary of Justice is herewith enclosed. This Office believes that it cannot elaborate further on the legal justification interposed by the Honorable Justice Secretary. It is to be observed that, under the amendment, only corporations covered by Sections 27 and 24 (c)(1) of the Tax Code are exempted from the corporate income tax and that outside of these corporations covered in the aforesaid sections of the Tax Code the amendment subjects to the income tax all other corporations notwithstanding the provisions of existing general or special laws to the contrary. The legislative intendment is clear, and, if rural banks are to be exempted, it is feared that the exemption of other corporations which are similarly granted exemption under special laws cannot be refused. If this should happen, the amendment would be rendered nugatory. In view of the foregoing, this Office does not recommend the favorable consideration of the request of the rural banks for the issuance of a Presidential directive exempting them from income tax. (SGD.) MISAEL P. VERA Commissioner of Internal Revenue