Tax Exemption of Dividend/Interest and Other Income that May Accrue to the Philippine Investments of the IBRD

March 19, 1992 BIR RULING NO. 088-92 28 (b) (8) 000-00 088-92 Standard Chartered Bank 7901 Makati Avenue Makati, Metro Manila Attention: Ms . Soledad R . Velasco Gentlemen : This refers to your letter dated August 12, 1991 requesting for a ruling to the effect that all dividend/interest and other income that may accrue to the Philippine investments of International Bank for Reconstruction and Development are exempt from any form of taxation. It is represented that one of your clients, the International Bank for Reconstruction and Development (IBRD), is a non-resident entity which maintains a Securities/Custodial Account under various sub-accounts with the Standard Chartered Bank in the Philippines; that its membership consists of those members of the International Monetary Fund which accepted membership in the IBRD before December 31, 1945, and those other members of the IMF, at such times and in accordance with such terms as may be prescribed by the Bank; and, that according to its Articles of Agreement, its income is immune from worldwide taxation. In reply, please be informed that Section 28(b)(8) of the Tax Code, as amended, enumerates such items that shall not be included in the taxpayer's gross income and which shall be exempt from income taxation. Specifically, it provides, among others, that: "(8) Miscellaneous items . (A) Income received from their investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on their deposits in banks in the Philippines by (i) foreign governments, (ii) financing institutions owned, controlled, or enjoying refinancing from them, and (iii) international or regional financing institutions established by governments ." (emphasis supplied) Considering the foregoing, it is, therefore, the opinion of this Office as it hereby holds that the income received by IBRD from interest on its deposits with the Standard Chartered Bank in the Philippines is exempt from income taxation. cdta Very truly yours, JOSE U. ONG Commissioner of Internal Revenue