BIR Ruling [DA-406-05]

September 30, 2005 BIR RULING [DA-406-05] RA 8367; DA-391-2003 Eulogio "Amang" Rodriguez Institute of Science and Technology (EARIST) Savings And Loan Association, Inc . Nagtahan, Sampaloc, Manila Attention: Ms. Maura V. Bautista Director Gentlemen : This refers to your letter dated June 23, 2005 which was referred to this Office by Revenue Region No. 6, Manila, by way of 3rd Indorsement dated August 15, 2005 requesting for exemption from the payment of 20% final withholding tax on the interest income from deposit and deposit substitutes with banks of Eulogio "Amang" Rodriguez Institute of Science and Technology (EARIST) Savings and Loan Association under Section 5 of RA No. 8367, otherwise known as the "Revised Non-Stock Savings and Loan Association Act of 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 Association", 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 EARIST from its deposit and deposit substitute is exempt from the twenty percent (20%) final withholding tax. (BIR Ruling No. DA-391-2003 dated October 31, 2003) 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. aAcHCT Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service