BIR Ruling No. 099-12

February 16, 2012 BIR RULING NO. 099-12 RA 8282; 000-00 Mr. Luis V. Olais Asst. Vice President, North Luzon Group Social Security System Harrison Road, Baguio City Gentlemen : This refers to your letter dated October 19, 2011 duly endorsed by Regional Director of Revenue Region No. 2-Baguio City requesting for the exemption on the tax on interest on your Operational Fund Account maintained with Land Bank of the Philippines, Harrison Branch, Baguio City. In reply, please be informed that Section 16 of Republic Act No. 8282 states that: "Sec. 16. Exemption from Tax, Legal Process and Lien. All laws to the contrary notwithstanding, the SSS and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom, as well as all supplies, equipment, papers or documents shall be exempt from any tax, assessment, fee, charge, or customs or import duty and all benefit payments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the member to the SSS. No tax measure of whatever nature enacted shall apply to the SSS, unless it expressly revokes the declared policy of the State in Section 2 hereof granting tax-exemption to the SSS. Any tax assessment imposed against the SSS shall be null and void." (emphasis supplied) Moreover, Section 27 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337 and further amended by Republic Act No. 10026 provides: "SEC. 27. Rates of Income Tax on Domestic Corporations. "xxx xxx xxx "(C) Government-owned or -Controlled Corporations, Agencies or Instrumentalities. The provisions of existing special or general laws to the contrary notwithstanding, all corporations, agencies, or instrumentalities owned or controlled by the Government, except the Government Service and Insurance System (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PHIC),the local water districts (LWD) and the Philippine Charity Sweepstakes Office (PCSO),shall pay such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in a similar business, industry, or activity. The above-cited provisions specifically excepted SSS from the payment of regular corporate income tax. Since SSS is one of the government-owned and controlled corporations mentioned, it is therefore exempt from the payment of income tax on the interest payments received from its Operational Fund Account. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue