BIR Ruling

February 23, 1973 Mr. Castor C. Belleza Talisay, Cebu S i r : This refers to your letter dated November 20, 1972 requesting information on a query stated as follows: cd "In connection with Presidential Decree on Tax Amnesty on undeclared income or commonly known as hidden wealth which imposes of depositing in any bank or invested in any of the following within six months from the time of such disclosure: a) government bonds, b) government securities, c) government debentures, and d) productive enterprises, I beg to request your good offices a clarification of the following transactions whether it will comply with the requirement: 1. A time or saving deposit with any bank; 2. A deposit with any bank and invested in the Money Market by the taxpayer thru the bank; 3. Investment on Treasury Bills; & 4. Investment on Central Bank Certificate of Indebtedness. I wish to know, also, whether the taxpayer who invested his money in the money market thru the bank under item 2 is subject to the lending investor tax." In reply thereto, I have the honor to inform you of Section 5(c), Revenue Regulations No. 15-72 implementing Presidential Decree No. 67 dated November 24, 1972 amending Presidential Decree No. 23 dated October 16, 1972 and Section 195-A of the Tax Code, viz: "SEC. 5. Conditions under which amnesty may be granted . The tax on previously untaxed income and/or wealth referred to in Section 3 hereof shall be accepted under the following conditions: xxx xxx xxx (c) If such previously untaxed income and/or wealth, or part thereof, consist of cash hoarded abroad, such cash must be repatriated and deposited with any bank in the Philippines or invested as entrepreneur capital, additional capital contribution or in new issues of capital stocks in any of the preferred areas of productive undertaking, to wit: 1. BOI registered enterprises; 2. NACIDA promoted industries; 3. BTTI sponsored tourist oriented projects; 4. Export oriented industries; 5. Banks: rural, private, development, commercial; 6. Utilities: transport, communication, power; 7. Agricultural cooperatives; 8. Livestock and agricultural development projects; 9. Foreign equity in domestic/resident corporation; 10. Insurance companies; or utilized in the purchase of new issues of the following instruments: 1. Government bonds; 2. Government securities; 3. Government debentures; 4. Bonds, notes, or other commercial papers issued by domestic corporations. Under the above-quoted provision of the regulations, the requirement to repatriate and deposit with any bank in the Philippines or to invest in preferred areas of productive undertaking or in the purchase of new issues of Government bonds, securities and debentures applies only to previously untaxed income and/or wealth consisting of cash hoarded abroad. A time or savings deposit with any bank in the Philippines or a deposit with the bank and invested in the money market by the taxpayer thru the bank satisfies the requirements of the regulations. Likewise, investments in Treasury bills and in Central Bank certificate of indebtedness comply with the requirement because those instruments are considered government securities since they represent obligations of the Government. (Sec. 122, R.A. No. 265, Central Bank Act). Finally, a lending investor is one who makes a practice of lending money for themselves or others at interest. (Sec. 194(u), Tax Code). Such being the case, a taxpayer who invested his money in the money market thru a bank is not a lending investor because he does not lend money for himself or others. Hence, said taxpayer is not subject to the taxes as lending investor. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue