BIR Ruling [DA-051-06]

February 16, 2006 BIR RULING [DA-051-06] Development Bank of the Philippines Sen. Gil J. Puyat Avenue corner Makati Avenue Makati City Attention: Mr. Manual S. Banayad First Vice President Gentlemen : This refers to your letter dated January 13, 2006 requesting for a ruling to the effect that the yield from the investment of the DBP GRATUITY PLAN FUND specifically from the purchase of government securities thru the Bureau of Treasury is exempt from the 20% final tax. It is represented that on April 17, 1996, this Office had duly approved the DBP Gratuity Plan Fund as a reasonable retirement benefit plan under then Republic Act (R.A.) No. 4917. In reply thereto, please be informed that under Section 60(B) of the Tax Code of 1991, the income of an employees trust is exempt from income tax. SUCH BEING THE CASE, this Office holds that the yield from the investment of the trust fund, of the DBP GRATUITY PLAN FUND which is an employee's trust, in government securities is exempt from the 20% final tax under Section 24(B)(1) of the Tax Code of 1997. Moreover, the trust fund is also exempt from the 20% final tax on interest and/or yield on deposit substitute instruments and on interest on its Philippine currency bank deposits. ( CIR vs. GCL Retirement Plan , G.R. No. 95022 dated March 23, 1992) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this rating shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service