BIR Ruling No. 134-84

July 31, 1984 BIR RULING NO. 134-84 24-cc-056-83-134-84 S i r : This refers to your letter dated May 4, 1983 requesting exemption from the payment of withholding tax on interests income of the bank deposits of Project: Gintong Alay. It appears that under LOI Nos. 955 and 1022-A Gintong Alay Project was created directly under the President to train athletes (track and field) for international competition. In reply, I have the honor to inform you that Presidential Decree No. 1177 requires all government units, government-owned or controlled corporations to pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws. Since Gintong Alay Project is a government agency, it is liable to income tax; hence, the interests on the bank deposits of Gintong Alay shall be subject to the 15% withholding tax in case of savings deposits and 20% in the case of time deposits and yield from deposit substitutes in accordance with Section 24(cc) in relation to Section 53(d)(1) both of the Tax Code, as amended. However, as a government agency, Gintong Alay Project is entitled to either a tax subsidy or payments constituting equity contributions, in which case, it shall not be required to pay cash or its equivalent. The revenue collecting agencies shall instead issue a "Payment Compliance Certificate" indicating the nature of the assessment and amount due. The subsidy shall be effected through journal vouchers or their equivalent (See Joint Budget Circular No. 289 and paragraphs 4, 6, and 9, Finance Circular No. 2-78, implementing Section 23, Presidential Decree No. 1177). This serves as authority of the depository banks to forego withholding of the 15% tax on interest of savings deposits and 20% tax in the case of time deposits and yield from deposit substitutes maintained by Gintong Alay with them. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner