BIR Ruling [DA-065-03]

March 4, 2003 BIR RULING [DA-065-03] 27 (D); 364-87 CARE Philippines #55 Don Benito Hernandez Street Jalandoni Compound Pasay City Attention: Mr. David Neff Country Director Gentlemen : This refers to your letter dated April 24, 2002 requesting for a renewal of your certificate of exemption relative to your interest income on Savings and Time Deposits. Documentary evidence submitted to this Office disclosed that the Cooperative for American Relief Everywhere, Inc. (CARE), a non-profit, private organization made up of 26 American relief, religious, labor, civic and cooperative agencies, provides a way for the American people, through their voluntary contributions to express their friendship for the people of other countries by extending direct assistance in the form of relief rehabilitation and reconstruction equipment and material; that in an Agreement executed by and between the Government of the Philippines and CARE, on August 1, 1983, it is specifically provided that the government will not levy taxes on CARE, its assets, property, receipts, operations or the salaries or other remuneration for personal services paid by CARE to its personnel of non-Philippine Nationality and that you were granted exemption from the 20% final withholding tax on interest income of your savings and time deposits pursuant to BIR Ruling No. 364-87 dated November 16, 1987. In reply, please be informed that income of any kind, to the extent required by any treaty obligations binding upon the Government of the Philippines shall not be included in gross income and shall be exempt from Philippine income tax pursuant to Section 34(B)(1). Such being the case, the interest earnings of your savings and time deposits are exempt from the 20% final withholding tax prescribed under Section 27(D) of the Tax Code of 1997. This serves as authority for the depository banks to forego the withholding of the 20% tax imposed on interest income from bank deposits and on interest and/or yield from deposit substitute instruments maintained by CARE Philippines with them. CSDcTH 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 ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group