BIR Ruling [DA-236-04]

May 7, 2004 BIR RULING [DA-236-04] Sec. 5, RA 8367 BIR Ruling No. DA-246-4-19-99 Science Savings and Loan Association, Inc. ITPDI, DOST CPD., Gen. Santos Avenue, Bicutan Taguig, MM. Attention: Ms. Mercedes R. Soriano President, SSLAI Gentlemen : This refers to your letter dated November 14, 2001, requesting a ruling to the effect that the interest income derived by you is exempt from the 20% final withholding tax pursuant to Section 5 of Republic Act No. 8367, approved on October 21, 1997 and which took effect on November 14, 1997. In reply, please be informed that Section 5 of Republic Act No. 8367 entitled "An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations", provides, viz : "SEC. 5. Tax Exemption . An Association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank; Provided, however, That income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. Interest earnings on deposits of members with the Associations, as well as the shares of its members from the net income of the Associations shall be exempt form income tax," Based on the foregoing, interest income derived by Science Savings and Loan Association, Inc. from its deposit and deposit substitutes are exempt from the twenty percent (20%) final withholding tax. ( BIR Ruling No. 138-97 dated December 29, 1997 ) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C BUAG Deputy Commissioner Legal and Inspection Group