BIR Ruling [DA-559-98]

December 9, 1998 BIR RULING [DA-559-98] Faculty & Employees Savings & Loan Association of Adamson University, Inc. 900 San Marcelino Street Ermita, Manila Attention: Mr . Bernardo G . Rivas President Gentlemen : This refers to your letter dated September 24, 1998 requesting for exemption from the twenty percent (20%) final withholding tax on interest income from deposit and deposit substitutes with a bank in the light of the provision of Section 5 of Republic Act No. 8367, approved on October 21, 1997 and which took effect on November 14, 1997. aisadc 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 the Faculty & Employees Savings & Loan of Adamson University, Inc. 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) cd Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)