Interest Income of Senior Citizen from Deposits in FCDU Subject to Final Tax

August 11, 1999 BIR RULING NO. 121-99 R.A. 7432-121-99 Rizal Commercial Banking Corporation RCBC Building, 333 Sen. Gil J. Puyat Avenue Makati, Metro Manila Attention: SVP Ma . Teresita A . Nunez Head, Controllership Division Gentlemen : This refers to your letter dated September 1, 1998 requesting for a clarification as to whether or not the foreign currency-denominated remuneration (monthly disability compensation from the US Veterans Administration) received by senior citizens even when deposited in a Foreign Currency Deposit Unit (FCDU) is considered tax-free. LLjur In reply, please be informed that a senior citizen shall mean any resident citizen of the Philippines at least sixty (60) years old, including those who have retired from both government offices and private enterprises, and has an income of not more than sixty thousand pesos (P60,000.00) per annum subject to review by the National Economic and Development Authority (NEDA) every three (3) years pursuant to Section 2 of Republic Act No. 7432. However, certain passive income derived by a qualified senior citizen from interest income from currency bank deposits, yield and other monetary benefit from deposit substitutes, trust fund and similar arrangements; royalties, prizes and winnings and interest income from a depository bank under the expanded foreign currency deposit system shall not be included in the determination of his income/annual taxable income which should not exceed the poverty level of P60,000.00 or such amount as may thereafter be determined by the NEDA for a certain taxable year inasmuch as said income are subject to income tax under Section 24(B)(1) of the Tax Code of 1997. In view thereof, interest income derived by a qualified senior citizen from a depository bank under the expanded foreign currency deposit system shall be subject to final tax at the rate of seven and one half percent (7%) of such interest income pursuant to Section 24(B)(1) of the Tax Code of 1997. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue