BIR Ruling No. 175-82

May 19, 1982 BIR RULING NO. 175-82 053-f 000-00 175-82 Land Bank of the Philippines 6th Floor, B.F. Condominium Bldg. Intramuros, Manila Attention: Ms . Flordelis F . Gregorio Officer-in-Charge Trust & Acquired Assets Department Gentlemen : This refers to your request for a certification to the effect that the interests on the savings and/or time deposit and yield from deposit substitutes of the Funds held by you in trust for the Philippine Virginia Tobacco Board are exempt from the final withholding tax. In reply, please be informed that under Section 23 of Presidential Decree No. 1177, otherwise, known as the Budget Reform Decree, all units of government including government-owned and controlled corporations, are subject to income tax. Accordingly, Philippine Virginia Tobacco Board is subject to income tax. The interest income of its trust fund therefore is subject to the 15% final withholding tax in the case of savings deposits and 20% in the case of time deposits and yield from deposit substitutes prescribed by Section 24(cc) of the Tax Code, as amended by Presidential Decree No. 1739. Being a government agency, the Philippine Virginia Tobacco Board is entitled to either a tax subsidy or payments constituting equity contributions, in which case, it is not required to pay cash or equivalent. The revenue collecting agencies shall instead issue a "payment compliance certificate" indicating the nature of the assessment and amount due. The subsidy or equity contributions shall be effected through journal vouchers or their equivalent. (See paragraphs 4, 6 and 9, Finance Circular No. 2-78 implementing Section 23, P.D. No. 1177). Very truly yours, RUBEN B. ANCHETA Acting Commissioner