BIR Ruling [DA-391-03]

October 31, 2003 BIR RULING [DA-391-03] R.A. 8367; 138-97 Philippine Trust Savings and Loan Association (PTSALA) Philtrust Bank Building United Nations Avenue corner San Marcelino Street Manila Attention: Nemesio M. Domingo President Gentlemen : This refers to your letter dated February 10, 2003 which was referred to this Office by Revenue Region No. 6, Manila, by way of 1st Indorsement dated February 13, 2003 requesting for exemption from the payment of 20% final withholding tax on the interest income from deposit and deposit substitutes with banks of the Philippine Trust Savings and Loan Association (PTSALA) under Section 5 of RA No. 8367, otherwise known as the "Revised Non-Stock Savings and Loan Association Act of 1997". HIDCTA 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 Associations, as well as the shares of its members from the net income of the Associations shall be exempt from income tax." Based on the foregoing, interest income derived by PTSALA 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 disclosed that the facts are different, and/or any of the requirements set forth in this letter are not complied with, 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 & Inspection Group