BIR Ruling

August 24, 1977 CARE Philippines 1010 A. Mabini, Ermita Manila Attention: Mr . John C . Hauser, Jr . Actg . Country Director Gentlemen : In reply to your letter dated August 14, 1977, please be informed as follows: 1) The interest earnings of the deposits maintained by the Cooperative For American Relief Everywhere, Inc. (CARE), which is exempt from taxes by virtue of the existing agreements entered by and between the Republic of the Philippines and CARE on August 1, 1963 and June 2, 1976, are exempt from the 15% withholding tax prescribed by Presidential Decree No. 1156. 2) The interests accruing to the deposits of the CARE personnel of non-Philippine nationality shall be subject to the 15% withholding tax since what the agreements exempt from tax, among others, are only the salaries or other remuneration for personal services paid by CARE to its personnel of non-Philippine nationality, and not the said alien personnel. Accordingly, considering that only tax-exempt depositors or tax-exempt entities can enjoy exemption from the 15% withholding tax and inasmuch as these foreign personnel can not be tax-exempt depositors, the said 15% withholding tax shall apply to interests on their deposits. This serves as authority of the depository banks to forego withholding of the 15% tax on the interest earnings of the funds deposited with them by CARE. Very truly yours, CONRADO P. DIAZ Deputy Commissioner of Internal Revenue TAN-D2567-D1025-A-2