Request that Interest Earnings of the Economic Support Fund Special Savings Account with PNB Be Exempt from FWT

July 23, 1986 BIR RULING NO. 125-86 51-d-1 000-00 125-86 Gentlemen : This refers to your letter dated April 17, 1986 requesting that (1) the interest earnings of the Economic Support Fund Special Savings Accounts deposited with the Philippine National Bank be exempt from the 17-1/2% final withholding tax; and (2) for the refund of the income taxes withheld therefrom. It is represented that the Economic Support Fund Secretariat is an agency created to manage the economic portion of the proceeds from the RP-US Amended Military Bases Agreement; that under which are appended to the Economic Support Fund projects, the Project Grant Agreement and the Grant will be free from any taxation or fees imposed under laws in effect in the territory of the grantee. In reply, please be informed that the above request is hereby granted. Pursuant to Section 29(c)(6) of the Tax Code, as amended, income of any kind, to the extent required by any treaty obligations binding upon the Government of the Philippines shall not be included in gross income and shall be exempt from Philippine income tax. Such being the case, the interest earnings of the Economic Support Fund Special Savings Accounts are exempt from the 17-1/2% final withholding tax prescribed under Section 24(d) of the Tax Code as amended. This serves as authority of the depository banks to forego the withholding of 17-1/2% tax imposed on interest income from bank deposits and on the interest and/or yield from deposit substitute instruments maintained by the Economic Support Fund Secretariat with them. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner