Request for Exemption from Withholding Tax on Interest Income from Bank Deposits

August 12, 1986 BIR RULING NO. 148-86 24 (c) 143-86 148-86 Gentlemen : This refers to your letter dated January 31, 1986 requesting exemption from the 17% (now 20% effective August 1, 1986) withholding tax on your interest income from bank deposits. It is represented that the Sta. Ana Credit Cooperative, Inc. (formerly Sta. Ana Parish Credit Cooperative, Inc.) is duly registered with the Bureau of Cooperatives Development under P.D. No. 175 as a full fledged cooperative in good standing with Certificate of Registration No. EF-271-RR dated February 11, 1976 and Certificate of Good Standing No. 1-86 issued April 7, 1986. In reply, please be informed that P.D. No. 2008 which took effect on January 8, 1986, restored the exemption of cooperatives from income and sales taxes that was previously abolished by P.D. No. 1955 effective October 15, 1984. The said tax exemption of cooperatives shall be effective only until December 31, 1991. (Revenue Memorandum Circular No. 10-86 dated May 12, 1986) Accordingly, since the exemption of cooperatives from income tax, among others, is restored by P.D. No. 2008 which is a law promulgated later than P.D. No. 1959 (effective October 15, 1984), you are exempt from the 17 1/2% (now 20%) final tax on interest income from Philippine currency bank deposits and yield from deposit substitutes from January 8, 1986 to December 31, 1991. This will serve as authority for the depository banks to forego withholding of the 17 1/2% (now 20%) final income tax on interest earnings of funds deposited with them by that cooperative. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner