BIR Ruling No. 140-96

December 12, 1996 BIR RULING NO. 140-96 53 (b) 000-00 140-96 Philippine Deposit Insurance Corporation Provident Fund Office 2228 Pasong Tamo Street Makati, Metro Manila Attention: Mr . Ernest Leung President Gentlemen : This refers to your letter dated July 23, 1996 requesting for exemption from the payment of income tax on the interest income derived by the Philippine Deposit Insurance Corporation (PDIC) Provident and Housing Funds from Philippine currency bank deposits and on yield or any other monetary benefit from deposit substitutes, trust funds and similar arrangements under Section 53 (b) of the Tax Code, as amended, and also for the corresponding refund of taxes withheld on the previous investments of the said funds. LLjur It is represented that the PDIC Provident Fund was created on September 13, 1984 by virtue of Board Resolution No. 107 of even date pursuant to the powers given to the PDIC Board of Directors under Section 8 (paragraph eleventh) of Republic Act No. 3591, as amended, while the Housing Fund was created through a Board Resolution No. 31 adopted on April 21, 1987; that the two (2) funds are aimed at distributing the corpus and income of the accumulated funds to the employees or their beneficiaries; that it is your contention that the PDIC Provident Fund is exempt from the payment of income taxes under Section 53(b) of the Tax Code, as amended. In reply, please be informed that the PDIC Provident Fund, being a government employees' trust, is exempt from income tax under Section 53 (b) of the Tax Code, and therefore, income of the trust fund from its investments are exempt from income tax provided that no part of the corpus or income of the Fund in its investments activities shall be used for or diverted to purposes other than for the exclusive benefit of the member-employees or their beneficiaries. Moreover, it appearing that the PDIC Housing Fund created on April 21, 1987 is also being administered by the Board of Trustees of the PDIC Provident Fund, its main objective being to provide assistance to Fund members more importantly in terms of acquiring houses of their own thru a housing program, the interest income derived by the fund from the housing fund investments are likewise exempt from income tax. In view of all the foregoing, you may file in writing your claim for refund or tax credit of the 20% final withholding tax on interest income derived from your Philippine currency bank deposits, and on yield/monetary benefit from deposit substitutes, trust funds and similar arrangements which was already deducted and remitted to the government with the Commissioner of Internal Revenue, Attention: Appellate Division, National Office Building, BIR, Diliman, Quezon City, within two (2) years from the date of payment of the said tax, together with the required documents as provided for under Revenue Memorandum Order No. 9-93 dated October 15, 1992, a copy of which is hereto attached for your guidance. casia Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue