Income Derived from Bank Deposits are Subject to Income Tax, Regardless of the Disposition Made of Such Income

March 21, 1991 BIR RULING NO. 050-91 26 000-00 050-91 Gentlemen : This refers to your letter dated November 5, 1990 requesting exemption from the 20% tax on interest income and/or yield on deposit substitute instruments, and interest income on your savings and time deposits. cdta It is represented that the Dominican Province of the Philippines, Inc. is a religious, non-stock, non-profit corporation registered under the laws of the Republic of the Philippines. In reply, please be informed that the last paragraph of Section 26 of the Tax Code, as amended, provides as follows: "Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal or from any of their activities conducted for profit, regardless of the disposition made of such income, shall be subject to tax imposed under this Code." (Emphasis supplied)." Since the organizations referred to in this last paragraph are those exempt organizations such as your organization being a religious corporation [Section 26 (e) of the Tax Code], the income which you received as such organization is exempt from the payment of income tax. However, since bank deposits are personal property in nature, income derived therefrom are subject to internal revenue taxes, of which is income tax, regardless of the disposition made of such income (BIR Ruling No. 78-002 dated May 11, 1978). In view thereof, it is regretted that your request cannot be granted for lack of legal basis. Very truly yours, (SGD.) JOSE U. ONG Commissioner