BIR Ruling [DA-718-99]

December 28, 1999 BIR RULING [DA-718-99] Toyota Motor Philippines Savings and Loan Association Inc . Km. 15 South Superhighway Paraaque Attention: Engr . Serafin M . Pantaleon President Gentlemen : This refers to your letter dated June 18, 1999 requesting for exemption from the following: 1) income tax; 2) twenty percent (20%) final withholding tax on interest income from deposit and deposit substitutes 3) interest earnings on deposits of members with the Association as well as the shares of its members from the net income of the Association 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. 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 Exemptions . An association shall be exempt from payment of tax in respect to income it receives, including interests 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, Toyota Motor Philippines Savings and Loan Association, Inc. is exempt from income tax and from the 20% final withholding tax on its interest income from its deposit and deposit substitutes (BIR Ruling No. 138-97 dated December 28, 1997). It is of course understood 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. 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, and/or any of the requirements set forth in this letter are not complied with, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group