Rate of Tax Applicable on a Financing Business

August 8, 1989 BIR RULING NO. 162-89 120 000-00 162-89 Gentlemen : This refers to your letter dated May 4, 1989 stating that you are engaged in the financing business operating under the supervision of the Central Bank (CB) and the Securities and Exchange Commission (SEC). You now request a ruling as to the rate of tax applicable on your said business. cd In reply, please be informed that, as a finance company, you are subject to the tax of 5% based on your gross receipts, pursuant to Section 120 of the Tax Code, as amended by Executive Order No. 273. Moreover, interests, commissions, and discounts that you derive from lending activities, as well as income you derive from financing leasing, if any, are taxed on the basis of remaining maturities of the instruments from which such receipts are derived in accordance with the following schedule: Short-term maturity not in excess of two (2) years 5% Medium-term maturity over two (2) years but not exceeding four (4) 3% Long-term maturity: (i) over four (4) years but not exceeding seven (7) years 1% (ii) over seven (7) years 0% Very truly yours, (SGD.) JOSE U. ONG Commissioner