BIR Ruling No. 085-62

July 11, 1962 BIR RULING NO. 085-62 Jalandoni & Jamir Attorneys & Counsellors at Law 6th Floor, Magsaysay Building San Luis, Ermita, Manila Attention : Atty . Rodegelio M . Jalandoni Gentlemen : This is reference to your letter dated May 30, 1962 requesting information regarding the tax liabilities of the Private Development Corporation of the Philippines which you alleged is now in the process of incorporation. casia It appears that the primary aims of said corporation will be "to engage in the business of assisting privately controlled industrial, agricultural, public utilities, mining and other productive enterprises in the Philippines by (1) assisting in the operation, expansion and modernization of such enterprises; (2) encouraging, sponsoring and facilitating participation of private capital, domestic as well as foreign, therein; (3) encouraging, sponsoring and facilitating private acquisition or ownership or investment, shares and securities in said enterprises; (4) creating, expanding and stimulating investment, shares and security markets; and (5) encouraging and sponsoring technical, financial, managerial and administrative knowledge in the country; by means or through the medium of (a) providing finance in the form of long or medium term loans and/or share participation; (b) sponsoring and/or underwriting any issue or conversion of shares and securities; (c) guaranteeing, counter-guaranteeing, or otherwise securing the payment of loans, obligations, or any other kinds of indebtedness raised or incurred for the purpose of financing any of said enterprises; (d) making funds available for investment or re-investment by causing the transfer of shares and securities, and by revolving investments, as rapidly as may be prudent; and (e) furnishing managerial and/or technical assistance and advise." You alleged further that the corporation is sponsored by the Philippine Government and will be granted loans by the U.S. Government's Agency for International Development (AID) and the World Bank. Based on the foregoing facts, it is our opinion that the corporation is a private development bank organized under Republic Act No. 2081, as amended by Republic Act No. 3147. Such being the case, the corporation comes with the purview of the term "incorporated or other bank" mentioned in Section 249 of the Tax Code and subject to the bank tax of five per centum (5%) of gross receipts prescribed therein. Interest paid to the AID or the World Bank are exempt from income tax (section 29-b-7), it appearing that said agencies are operated by foreign government. Very truly yours, JOSE B. LINGAD Acting Commissioner of Internal Revenue