BIR Ruling No. 188-82

June 3, 1982 BIR RULING NO. 188-82 024 (cc) 000-00 188-82 Land Bank of the Philippines 6th Floor, BF Condominium Bldg. Intramuros, Manila Attention: Mr . A . B . F . Gaviola, Jr . Acting Trust Officer Gentlemen : This refers to your letter dated January 8, 1981, in behalf of the GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) requesting certification from this Bureau as to the tax-exempt status of the GSIS pursuant to its Charter, Presidential Decree No. 1146, for the purpose of exemption from the withholding tax provision of Section 24(cc) of the Tax Code, as amended by Presidential Decree No. 1739 and implemented by Revenue Regulations No. 12-80. In reply, please be informed that although under its Charter (P.D. No. 1146), the GSIS is exempt from all taxes, assessments, fees, charges or duties of all kinds, said exemption has been superseded by Section 23 of Presidential Decree No. 1177, which requires government-owned or controlled corporations to pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws. (See Opinion No. 123, S. 1977, Secretary of Justice). Accordingly, since the GSIS is liable to income tax, its interest income derived from money market placements of the trust funds of the System is subject to the 20% withholding tax imposed under Section 24(cc) in relation to Section 55(e) both of the Tax Code, as amended by P.D. No. 1739. However, inasmuch as the GSIS is a tax-exempt government corporation, it shall be entitled to either a tax subsidy or payment constituting equity contributions, in which case, it shall not be 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). cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner