BIR Ruling [DA-401-03]
BIR Ruling [DA-401-03] • Bureau of Internal Revenue (BIR) Issuances • Rulings (Unnumbered) • Nov 10, 2003
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November 10, 2003 BIR RULING [DA-401-03] 32 (b) (7) (a), DA 130-02 Monetary Authority of Singapore 10 Shenton Way MAS Building Singapore Attention: Ms . Loh Mun Su Gentlemen : This refers to your letter dated April 24, 2003 requesting for an opinion on the correct withholding tax rates applicable to its securities investments in the Philippines. It is represented that the Monetary Authority of Singapore is a resident of Singapore for income tax purposes; and that it maintains substantial shareholdings in the Philippines under the custody of the Standard Chartered Bank-Manila. In reply, please be informed that Section 32(B)(7)(a) of the Tax Code of 1997 provides that income derived from investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments, (ii) financial institutions owned, controlled, or enjoying refinancing from foreign governments, and (iii) international or regional financial institutions established by foreign governments shall not be included in gross income and shall be exempt from taxation. Accordingly, since as represented the Monetary Authority of Singapore is a financial institution owned, controlled and financed by the State of Singapore as contemplated under Section 32(B)(7)(a)(ii) of the Tax Code of 1997, any income received by the Monetary Authority of Singapore from its investment in the Philippines, such as interest on loans, interest on deposits, interest on bonds, dividends, and capital gains on sale of shares of stock, bonds, and other domestic securities, are exempt from Philippine income tax and consequently from withholding tax. ( BIR Ruling No. DA 130-02 dated July 31, 2002 ) 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, then this ruling shall be considered null and void. ETDHaC Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group
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