BIR Ruling [DA-562-98]

December 9, 1998 BIR RULING [DA-562-98] Bank of the Philippine Islands BPI Building Ayala Avenue cor. Paseo de Roxas Makati City Gentlemen : This refers to your letter dated October 28, 1998 requesting for a ruling on whether or not your client is exempt from the 20% final withholding tax on its bank deposits and yields from deposit substitutes. LLpr It is represented that your client is a foundation organized and operating under and by virtue of the laws of the Philippines; that it has been organized for scientific advancement; that its funds are dedicated to scientific pursuits within the meaning of Section 24 of Republic Act No. 2067, as amended by Republic Act No. 3589 and that it has been accredited by the Department of Science and Technology. In reply, please be informed that although your client is exempt from the payment of income tax on income received by it as such science foundation and from filing the corresponding income tax return concerning such income, it is nevertheless subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code on its income derived from any of its properties, real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Accordingly, interest income of your client from Philippine currency bank deposits and yield or any other monetary benefit from deposit substitute instruments are subject to the 20% final withholding tax pursuant to Section 27(D) in relation to Section 57(A) of the Tax Code of 1997. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group