BIR Ruling

November 25, 1977 A Rural Bank, Its Exemption from Income Tax and from the 15% Withholding Tax In reply to your letter dated September 16, 1977, please be informed that since that Bank has been found by this Office as having net assets not exceeding one million pesos (P1,000,000.00), it is exempt from the payment of income tax, pursuant to Section 14 of Republic Act No. 720, as amended. Accordingly, the interest earnings that accrue to its savings and time deposits with several commercial banks are exempt from the 15% withholding tax prescribed by Presidential Decree No. 1156. This serves as authority of the depository banks to forego withholding of 15% tax on the interest income of the deposits maintained by that Bank with them.