20% Final Withholding Tax on Borrowing or Loans Obtained as a Lending Investor

May 29, 1990 BIR RULING NO. 106-90 21 (c) 000-00 106-90 Gentlemen : This refers to your letter dated January 10, 1990 requesting the opinion of this Office whether or not a Lending Investor is required by the Bureau of Internal Revenue to withhold on interest paid on its borrowings or loans obtained from any source and to report the same to the BIR. cdta In reply, please be informed that the borrowing or loans obtained by you as a lending investor, are in the nature of deposit substitutes as defined in Section 2(h) (ii) of Revenue Regulations No. 17-84. Hence, the interest to be paid by you to your lenders, individual or corporate, are subject to the 20% final withholding tax, pursuant to Sections 21(c)(1) and 24(e)(1) of the Tax Code, as amended, to be remitted by you to the collecting officer of the BIR. Very truly yours, (SGD.) JOSE U. ONG Commissioner