Exemption from Taxation of the Interests of Bank Deposits of Diplomatic Missions in the Philippines

August 28, 1995 BIR RULING NO. 130-95 130-95 Embassy of the People's Republic of China 4896 Pasay Road Dasmarias Village Makati City Attention: Mr . Wang Quian Gentlemen : This refers to your letter dated July 13, 1995, requesting information concerning the exemption from taxation of the interests of bank deposits of diplomatic missions in the Philippines. In reply, please be informed that interests on the bank deposits of foreign embassies, such as the Embassy of the People's Republic of China, are exempt from income tax pursuant to Section 28(b)(8)(A) of the Tax code, as amended, and consequently from the final withholding tax. Exemption may also be based on the principle of exterritoriality or extraterritoriality pursuant to which certain persons and property belonging to one State and found in the territory of another are considered outside the jurisdiction of the latter and, therefore, not subject to taxation. However, the interest income of the personal deposits of the personnel of that Embassy is subject to income tax. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue