Exemption of Books of Accounts of Rural Banks

September 3, 1971 BIR RULING NO. 018-71 Exemption of books of accounts of Rural Banks . In determining the internal revenue tax liabilities of rural banks, the provisions of Section 14 of Republic Act No. 720, as last amended by Republic Act No. 5939 should be observed. Under the provisions of said section, if the net assets of a rural bank exceed one million pesos, it is already subject to internal revenue taxes. Therefore, an examination of its books of accounts by internal revenue officers is in order, so as to determine whether it falls within the tax exemption. It is, however, contended by X Rural Bank that it cannot be compelled to produce its books of accounts for examination because of the prohibition contained in Republic Act No. 1405. It should be noted that said Republic Act only considers bank deposit as absolutely confidential in nature and may not be examined, inquired or looked into. It does not, therefore, prohibit the examination of the books of accounts of banks for internal revenue purposes. cdta