BIR Ruling [DA-548-04]

November 5, 2004 BIR RULING [DA-548-04] 27 (D); 32 (B) (5); DA-065-2003 Care Philippines #55 Don Benito Hernandez Street Jalandoni Compound Pasay City Attention: Mr. Ted T. Bonpin Country Director Gentlemen : This refers to your letter dated April 28, 2004 requesting for a ruling that the foreign currency deposit of Cooperative For American Relief Everywhere, Inc. (CARE) is exempt from the 7.5 withholding tax. Documents presented to this Office disclosed that CARE, a non-profit, private organization made up of 26 American relief, religious, labor, civic and cooperative agencies, provides a way for the American people, through their voluntary contributions to express their friendship for rehabilitation and reconstruction equipment and material and other urgently needed commodities by individuals and organizations outside of the Philippines to individuals and lawful existing organizations on the Philippines; that in an Agreement executed by and between the Government of the Philippines and CARE, on August 1, 1983, it is specifically provided that the government will not levy taxes on CARE, its assets, property, receipts, operations or the salaries or other remuneration for personal services paid by CARE to its personnel of non-Philippine Nationality; that you were granted exemption from the 20% final withholding tax on interest income of your savings and time deposits pursuant to BIR Ruling No. 364-87 dated November 16, 1987; and that BIR Ruling No. DA-065-2003 dated March 4, 2003 had been issued in your favor exempting you from the 20% final withholding tax prescribed under Section 27(D) of the Tax Code of 1997. In reply, please be informed that pursuant to No. 3(b) of the Agreement between the Government of the Philippines and Cooperative For American Relief Everywhere, Inc.,which provides, viz : "3. The government will: xxx xxx xxx (b) Levy no taxes: (1) On commodities imported by CARE into the Philippines belonging to CARE, any organization distributing them for CARE, or the ultimate recipients: (2) On CARE, its assets, property, receipts, operations or the salaries or other remuneration for personnel services paid by CARE to its personnel of non-Philippine nationality. xxx xxx xxx" income of any kind, to the extent required by any treaty obligations binding upon the Government of the Philippines shall not be included in gross income and shall be exempt from Philippine income tax pursuant to Section 32(B)(5) of the Tax Code of 1997. ADcEST This serves as authority for the depository banks to forego the withholding of the 7.5% tax imposed on the foreign currency deposit maintained by the Cooperative For American Relief Everywhere, Inc. with them. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group