Interest Income from Personal Deposits of UN Personnel Residing in the Philippines, Subject to Tax

April 27, 1998 BIR RULING NO. 049-98 24 (B)-000-00-049-98 Philippine National Bank PNB Financial Center Roxas Boulevard Metro Manila Attention: Ms . Dalia B . Elazegui Branch Manager Gentlemen : This refers to your letter dated December 12, 1997 requesting for advice as to whether or not the tax exemption privileges extended to United Nations personnel include exemption from the final withholding tax of the interest income of their bank deposits with the Philippine National Bank. In reply, please be informed that under Section (b), Article V of the Convention on the Privileges and Immunities of the United Nations, as adopted by the General Assembly on February 13, 1946, pertinent provision of which is quoted as follows, viz: LLphil "Article V "Officials "Section 18. Officials of the United Nations shall: "xxx xxx xxx" "(b) Be exempt from taxation on the salaries and emoluments paid to them by the United Nations; "xxx xxx xxx" Likewise, Sections 18 and 19(b) of Article VI of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations provides that "Article VI "Officials "Section 18 Each specialized agency will specify the categories of officials to which the provisions of this article and of article VIII shall apply. It shall communicate them to the Governments of all States parties to this Convention in respect of that agency and to the Secretary-General of the United Nations. The names of the officials included in these categories shall from time to time be made known to the above-mentioned Governments. cdlex "Section 19 Officials of the specialized agencies shall: "xxx xxx xxx" "(b) Enjoy the same exemptions from taxation in respect of the salaries and emoluments paid to them by the specialized agencies and on the same conditions as are enjoyed by officials of the United Nations; "xxx xxx xxx" Accordingly, notwithstanding the foregoing provisions on the privileges of officials of the United Nations, interest income from personal deposits of the personnel of the United Nations residing in the Philippines, whether Filipino or resident alien, is subject to tax pursuant to Section 24(B)(1) of the Tax Code of 1997 considering that the interest income is derived by them from their passive investments in the Philippines and not from their salaries or emolument as personnel of the United Nations. LLpr Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue