Request for Exemption from 20% Final Withholding Tax on Interest Income from Money Placements/Deposits With Other Banks

November 12, 1998 BIR RULING NO. 160-98 R.A. 7906-000-00-160-98 Centennial Bank G/F Prestige Tower Emerald Avenue, Tower Center Pasig City Attention: Mrs . Myrna S . Javier AVP & Comptroller Gentlemen : This refers to your letter dated May 5, 1998 requesting for exemption from the twenty percent (20%) final withholding tax on interest income from money placements/deposits with other banks, in the light of the provision of Section 17 of Republic Act No. 7906, otherwise known as the Thrift Banks Act of 1995. In reply please be informed that pursuant to Section 17 of R.A. No. 7906, the exemption of thrift banks from all taxes, fees and other charges of whatever nature and description does not include the corporate income taxes and local taxes, fees and charges of whatever nature and description. Among the corporate income taxes which thrift banks are liable to pay under Section 27(D)(1) of the Tax Code of 1997 is the 20% final withholding tax (FWT) on interest income derived from Philippine currency bank deposits and yield or any other monetary benefit from deposit substitutes, trust funds and similar arrangements and royalties derived from sources within the Philippines (Sec. 2 (A)(a), Revenue Regulations No. 4-95 dated June 15, 1995). cd Accordingly, your aforesaid request is hereby denied for lack of legal basis. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue