BIR Ruling [DA-070-00]

February 2, 2000 BIR RULING [DA-070-00] 27 (D) DA-562-98 Rex Oasis of Arts and Culture Foundation, Inc . 4/L REX Publishing House 84 P. Florentino St., Sta. Mesa Heights Quezon City Attention: Ms . Evelyn P . Ibasco Executive Officer Gentlemen : This refers to your letter dated September 4, 1998 requesting for exemption from the payment of final withholding tax on interest income from currency bank deposits. It is represented that Rex Oasis of Arts and Culture Foundation, Inc. (ROAC) is a non-stock, non-profit organization; that ROAC has a scholarship program as one of its projects; that to realized this, ROAC sources funds by selling books consigned to you and ROAC gets 10% commission; that the income of ROAC was deposited to PCI Bank, Banawe Branch; and that you noticed that you are being taxed on the interests from your deposits with the bank. In reply, please be informed that a foundation as contemplated under Section 30(E) of the Tax Code of 1997 is subject to the payment of income tax on income derived from any of its properties, real or personal or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Accordingly, since interest income from currency bank deposits and yield or any other monetary benefit from deposit substitute instruments are income from personal property, said interest income are subject to the 20% final withholding tax pursuant to Section 27(D) in relation to Section 57(A) of the Tax Code of 1997. Moreover, your interest income derived under the expanded foreign currency deposit system are subject to a final withholding tax of 7 % pursuant to Section 27(D)(l) in relation to Section 57(B) of the Tax Code of 1997. (BIR Ruling No. DA-562-98 dated December 9, 1998) EcTDCI Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. EQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)