Request for Exemption from Withholding Tax on Interest of Bank Deposits

February 22, 1984 BIR RULING NO. 041-84 24-cc-000-00-041-84 Gentlemen : This refers to your letter dated October 28, 1980 forwarded to this Office by the Regional Director, Revenue Region No. 4-C, San Pablo City, requesting exemption from withholding tax on interest of bank deposits. In reply, I have the honor to inform you that pursuant to Section 46 of Presidential Decree No. 198 otherwise known as the Provincial Water Utilities Act of 1973 as amended by P.D. No. 768, water districts are exempt from paying income taxes. Accordingly, and since the San Pablo Water District is organized under P.D. No. 198, as amended, its interest income on bank deposits is exempt from the 15% withholding tax in the case of savings deposits and 20% in the case of time deposits and yield from deposits substitutes prescribed by Section 24(cc) in relation to Section 53(e), of the Tax Code, as amended by Presidential Decree No. 1739. This serves as authority of the depository banks to forego withholding of the tax on the interest earnings of the deposits maintained by that Water District with them. adc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner