Yield on Deposit Substitutes Received Prior to October 15, 1984 Still Subject to 20% Final Tax

January 16, 1985 BIR RULING NO. 008-85 24 (cc) 008-85 Gentlemen : This refers to your letter dated December 6, 1984 stating that your client, Procter and Gamble Philippines Manufacturing Corporation, has an outstanding loan with Citibank, N.A. covered by a note which the latter sold to a placer (Philam) with an unconditional commitment to repurchase the same at stipulated periods and repurchase price; that your client guaranteed a net yield to Philam and, in effect, is absorbing the withholding tax; and that prior to Presidential Decree No. 1959, the yield to Philam was subject to withholding tax at the rate of 20% P.D. No. 1959 effective October 15, 1984 provides for a rate of 15%. In connection therewith, you request confirmation of your opinion that the interest paid or accrued on your client's note will be subject to 15% if the same accrued on or after October 15, 1984 notwithstanding that the paper was issued in 1981. In reply, I have the honor to inform you that your opinion is hereby confirmed. One of the amendments introduced by P.D. No. 1959 in Section 24(cc) of the Tax Code is the reduction of the rate of final withholding tax on yield from deposit substitutes received by domestic or resident foreign corporations from 20% to 15% beginning October 15, 1984, the effective date of P.D. No. 1959. Hence, the yield on deposit substitutes received prior to October 15, 1984 is still subject to 20% final tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner