Philippine Amanah-Bank - Tax-Exemption Privileges

April 28, 1993 BIR RULING NO. 153-93 PHILIPPINE AMANAH-BANK TAX-EXEMPTION PRIVILEGES R.A. 6848 000-00 153-93 Philippine Amanah Bank Doa Narcisa Building 8751 Paseo de Roxas Makati, Metro Manila Attention: Mr . Farouk A . Carpizon Acting President This refers to your letter dated February 8, 1990, in effect, requesting for a ruling on the scope of your tax exemption privileges under Section 37 of Republic Act No. 6848. cdta In reply, we quote for reference the provision of Section 37, Republic Act No. 6848, effective February 15, 1990 stating: "Sec. 17. Tax Exemption . The Islamic Bank assets, profits, distributions and all contracts, deeds, documents and transactions related to the conduct of business of the Islamic Bank shall be exempted from all taxes under the National Internal Revenue Code to commence from the first taxable year, following its actual Islamic banking operation as made allowable: "(1) One hundred per centum (100%) for the first five years; and "(2) Seventy-five per centum (75%) for the sixth through the eighth years: Provided, however, that said exemption shall apply only to such taxes, fees, charges and assessments for which the Islamic Bank would otherwise be liable and shall not apply to the taxes, fees, charges or assessments payable by persons or other entities doing business with the Islamic Bank." "An investment in Islamic banking business to the extent of actual participation in profit and loss sharing scheme, paid in cash or property, shall be granted an exemption from all taxes under the National Internal Revenue Code, except income tax: Provided, That any investment tax allowance shall be permitted as a deduction from taxable income under such transactions to the extent that the Islamic Bank pays out zakat on the income of investor's capital and surplus reserves for the duration of the joint investment period." Based on the foregoing, you are entitled to the following privileges: 1. Exemption from income tax on whatever gains derived from your dealings of assets whether real or personal. 2. Exemption from documentary stamp tax on your document of conveyance of real property under Section 196 of the Tax Code. 3. Exemption from gross receipts tax under Section 119 of the Tax Code. The foregoing tax exemption privileges however are subject to the following conditions: 1. For the first five years your tax exemption privilege is 100%. 2. From the sixth through the eighth years, your tax exemption privilege shall be 75%. Moreover, the aforesaid tax exemption privilege shall cover only internal revenue taxes for which you are directly liable. It shall not include taxes which are payable by persons merely doing business with you, such as value-added tax on your local purchases of commodities. Finally, the foregoing tax exemption privileges cannot be availed of by you after the eighth year of your operations. aisadc VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue