Centennial Bank Subject to Gross Receipts Tax

January 11, 2002 BIR RULING NO. 005-02 121 000-00 Centennial Bank G/F Prestige Tower, Emerald Avenue Ortigas Center, Pasig City Attention: Mr. Eduardo C. Visperas President and CEO Gentlemen : This refers to your letters dated March 1, 2000 and March 9, 2000 requesting in effect for a ruling on the applicability of gross receipts tax (GRT) to your bank under Section 121 of the Tax Code of 1997 in relation to Section 17 of Republic Act (R.A.) No. 7906. It is represented that Centennial Bank is a savings bank; that it started banking operations on February 18, 1998; that it was organized under Republic Act No. 7906, otherwise known as the Thrift Bank Act of 1995; and that it is owned by the three big financial institutions of the Armed Forces of the Philippines, namely: the Armed Forces and Police Mutual Benefit Association, Inc. (AFPMBAI), the Armed Forces and Police Savings and Loan Association, Inc. (AFPSLAI), and the Armed Forces and Police Retirements and Separation Benefit System (AFPRSBS). In reply, please be informed that Section 7 of R.A. No. 8424 provides that the provision of Section 17 of R.A. No. 7906 shall continue to be in force and effect only until December 31, 1999. Accordingly, effective January 1, 2000, all thrift banks, whether in operation as of that date or thereafter, shall no longer enjoy tax exemption as provided under Section 17 of R.A. No. 7906, thereby subjecting all thrift banks to taxes, fees and charges in the same manner and at the same rate as banks and other financial intermediaries. In view of the foregoing, this Office is of the opinion and so holds that Centennial Bank is subject to the gross receipts tax imposed under Section 121 of the Tax Code of 1997 effective January 1, 2000. 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. AEaSTC Very truly yours, (SGD.) REN G. BAEZ Commissioner of Internal Revenue