Request for Tax Exemption of Interest Income from Savings and Time Deposits of Home Financing Corp. Provident Fund

June 25, 1985 BIR RULING NO. 103-85 24-cc 000-00 103-85 Gentlemen : This refers to your letter dated March 15, 1985 requesting that the interest income from savings and time deposits of the Home Financing Corporation (HFC) Provident Fund be exempted from the 15% withholding tax. In reply, please be informed that your request cannot be granted for lack of legal basis. Under Sections 24(cc) and 53(d)(1) of the Tax Code as amended by Presidential Decree No. 1959 which took effect on October 15, 1984, a final withholding tax of 15% shall now be imposed on interest income from Philippine currency bank deposits, whether savings or time deposits, and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements. (Rev. Regs. No. 17-84) Under the said amendment, the provision on the exemption from the withholding tax of the recipient if the interest income is exempt from income taxation has been abolished. The deletion of, among others, the exempting provisions under the old law is a clear manifestation that the single 15% rate is imposable on all interest income from deposits, deposit substitutes, trust funds and similar arrangements, regardless as to the tax status or character of the recipient thereof. (RMC No. 31-84) Such being the case, the HFC Provident Fund is now subject to the 15% final withholding tax on interest and/or yield on deposit substitute instruments and interest on savings and time deposits paid or accrued beginning October 15, 1984. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner