BIR Ruling [DA-225-05]

May 17, 2005 BIR RULING [DA-225-05] 30; DA-220-02 UP College of Architecture Alumni Foundation, Inc . 4th Fl. Melchor Hall, UP Diliman Quezon City Gentlemen : This refers to a letter by the Philippine National Bank (PNB) Mandaluyong Branch dated October 4, 2004, requesting for exemption from withholding tax on interest income of your earnings from bank deposits. Documents submitted shows that UP College of Architecture Alumni Foundation, Inc., is a non-stock, non-profit corporation duly organized with the Securities and Exchange Commission (SEC) under SEC Registration No. ANO95-00000044 dated January 5, 1995. In reply, please be informed that pursuant to the last paragraph of Section 30 of the 1997 Tax Code, income of whatever kind and character of all the organizations enumerated therein derived from any of their properties, real or personal or from any of their activities conducted for profit regardless of the disposition made of such income shall be subject to tax imposed under said Code. Consequently, although you may be exempted from income tax on income received by you as such organization, pursuant to Section 30 of the Tax Code of 1997, the interest income of your bank deposits, being income derived from personal property are subject to income tax. CAaSED Accordingly, interest income from currency bank deposits and yield or any other monetary benefit from deposit substitute instruments are subject to the 20% final withholding tax pursuant to Section 27(D)(1) 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 1/2% pursuant to Section 27(D)(1) in relation to Section 57(A) of the 1997 Tax Code. (BIR Ruling No. DA-220-02 dated November 25, 2002) Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group