BIR Ruling [DA-160-00]

March 21, 2000 BIR RULING [DA-160-00] E.O. 93; 34-94 Urban Development Bank United Nations Avenue Manila Attention: Mr . Julius L . Taguba Branch Manager Gentlemen : This refers to your letter dated November 20, 1997 requesting for a ruling as to whether the Girl Scouts of the Philippines is exempt from the 20% final tax on earnings or yield realized from bank deposits. llcd In reply, please be informed that Presidential Decree No. 1931 dated June 11, 1984 has withdrawn the tax and duty exemption privileges, including the preferential tax treatment of all units of government, i.e., the National Government, its agencies and political subdivisions, as well as the government-owned or controlled corporations. Corollary to this, Executive Order No. 93 effective March 10, 1987 withdrew all tax and duty incentives granted to government and private entities subject to certain exceptions. Furthermore, it has been the constant and uniform holding of this Office that exemption from taxation is not favored and is never presumed so that if granted it must be strictly construed against the taxpayer. Affirmatively put, the law frowns exemptions from taxation, hence, exempting provision should be construed strictissimi juris . (Catholic Church vs. Hastings, 5 Phil 70; Esso Standard Eastern, Inc. vs. Acting Commissioner of Customs, L-D1841, Oct. 28, 1966, 18 SCRA 48; Phil. Acetylene vs. CIR, L-19701, Aug. 17, 1967; 20 SCRA 1056; CIR vs. Guerrero, L-20942, Sept. 22, 1967, 21 SCRA 180; Manila Electric Co. vs. Vera, L-29987, Oct. 22, 1975, 67 SCRA 351) In view thereof, this Office is of the opinion as it hereby holds that the Girl Scouts of the Philippines is subject to income tax and consequently to the 20% final tax on earnings or yield realized from bank deposits. Accordingly, as the person having the receipt, control, custody disposal and payment of such interest income, you are liable to withhold the 20% final tax on such interest income before paying the same to the person entitled thereto. (BIR Ruling No 34-94 dated February 7, 1994) Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)