Bank of Commerce

July 23, 2007 BIR RULING [DA-404-07] Rev. Regs. 10-98 DA-050-01 Bank of Commerce Phil. First 6764 Ayala Avenue Makati City, Philippines Attention: Messrs. Alvin S. Panuncialman Account Officer Eutropio G. Mercado Head-Corporate Banking I Gentlemen : This refers to your letter dated September 26, 2006 requesting in behalf of your client, Ely Del Carmen, for a ruling pursuant to Revenue Regulations No. 10-98 for entitlement to the tax exemption of a non-resident of the Philippines on his foreign currency deposits. In reply please be informed that Section 24 (B) (1) provides as follows: "SEC. 24. Income Tax Rate . xxx xxx xxx (B) Rates of Tax on Certain Passive Income. (1) Interest, Royalties, Prizes, and Other Winnings. A final tax at the rate of twenty percent (20%) is hereby imposed upon the amount of interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and other similar arrangements; royalties, except on books, as well as other literary works and musical compositions, . . ." " Provided, however, That interest income received by an individual taxpayer ( except a nonresident individual ) from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of seven and one-half percent (7 1/2%) of such interest income". SUCH BEING THE CASE, this Office holds that interest income from the foreign currency deposits of non-residents of the Philippines shall not be subject to income tax pursuant to Section 24 (B) (1) of the Tax Code of 1997, as amended. SCIcTD This ruling is being issued on the basis of the foregoing facts as represented. If upon investigation, it will be discovered that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service