Wyeth Philippines Employees' Savings and Loan Association, Inc.

September 10, 2018 BIR RULING NO. 1187-18 RA No. 8367; BIR Ruling No. 415-16 Wyeth Philippines Employees' Savings and Loan Association, Inc. 2236 Chino Roces Ave.,Makati City Attention: AAA _______________ Gentlemen : This refers to your letter dated December 16, 2013, as indorsed by the Regional Director of Revenue Region No. 8, Makati City on May 19, 2015, requesting for a renewal of the certificate of exemption from the twenty percent (20%) final withholding tax on the interest income derived from its deposits and deposit substitutes pursuant to Republic Act (RA) No. 8367, otherwise known as the "Revised Non-Stock Savings and Loan Act of 1997." acEHCD Documents show that WYETH PHILIPPINES EMPLOYEES' SAVINGS & LOAN ASSOCIATION, INC. [Formerly: Wyeth-Suaco Employees Savings & Loan Association, Inc.] (WPESLAI for brevity), with TIN: 000-512-324-000, is a non-stock savings and loan association organized and operated under Philippine laws. It is duly registered with the Securities and Exchange Commission (SEC) under Company Registration No. 75367. On October 1, 1977, the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas [BSP]) issued Certificate of Authority No. NS-66 in favor of WPESLAI. On December 12, 2000, the Bureau of Internal Revenue (BIR) issued BIR Ruling No. DA-427-2000 exempting it from payment of withholding tax on interest income. In reply, please be informed that Section 5 of RA No. 8367 provides " SECTION 5. Tax Exemption. An Association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank; Provided, however, That income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. Interest earnings on deposits of members with Associations, as well as the shares of its members from the net income of the Associations shall be exempt from income tax." Based on the foregoing, WYETH PHILIPPINES EMPLOYEES' SAVINGS & LOAN ASSOCIATION, INC. [Formerly: Wyeth-Suaco Employees Savings & Loan Association, Inc.] shall be exempt from income tax with respect to income it receives, including interest income derived from its deposit and deposit substitutes which shall be exempt from twenty percent (20%) final withholding tax. EcTCAD However, any disposition made by WPESLAI of its properties (real or personal) is subject to applicable income tax depending on the classification of its properties either as capital or ordinary assets. Moreover, Section 4 of Revenue Regulations (RR) No. 9-2004, as amended, implementing Section 122 of the National Internal Revenue Code (NIRC) of 1997, as amended, as further clarified in Revenue Memorandum Circular (RMC) No. 9-2016, provides for the imposition of Gross Receipts Tax (GRT) on Non-Bank Financial Intermediaries (NBFIs). Since WPESLAI is a NBFI, it is subject to GRT on income derived from its operations. Likewise, it is subject to Documentary Stamp Tax (DST) under the provisions of RR No. 13-2004, implementing Title VII of the NIRC, as amended, particularly on loan agreements, mortgages, pledges, foreclosures and sales, among others. Finally, if WPESLAI is one of the parties to a taxable transaction, it shall be responsible for the remittance of DST due regardless of who will bear the burden of paying the DST pursuant to RR No. 9-2000. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue