BIR Ruling No. 191-82

June 3, 1982 BIR RULING NO. 191-82 209-00 5-81 191-82 Bangko sa Lupa ng Pilipinas (Land Bank of the Philippines) 6th Floor B.F. Condominium Bldg. Intramuros, Metro Manila Attention: Mr . Teodulo R . Dio Manager, Legal Department Gentlemen : This refers to your letter dated February 5, 1981 requesting clarification as to whether or not the percentage tax equivalent to five per centum (5%) on gross income imposed on dealer in securities and lending investors as provided for under Section 3(b) of Revenue Regulations No. 12-80, implementing Section 209 of the Tax Code of 1977, as amended by P.D. No. 1739, would also be applicable to the Land Bank for certain income derived from the sale of securities and lending transactions. You stated that by virtue of P.D. No. 251, Land Bank is empowered to underwrite, sell, or dispose stocks, bonds, debentures, securities and other evidences of indebtedness of other corporations and of the government or its instrumentalities and likewise authorized to grant short, medium and long-term loans; that notwithstanding the exercise of the aforesaid powers, it is your view that said Bank does not fall within the sphere of the definition of dealer in securities and lending investors under Revenue Regulations No. 12-80 for the reason that said banking transactions are merely incidental to its business as a banking institution, and therefore not liable to pay the required percentage tax imposed on dealer in securities and lending investors. In reply, I have the honor to inform you that for purposes of the percentage taxes, the distinction between gross receipts from banking activities and quasi-banking activities for that matter and gross income from activities as dealers in securities or as lending investors had ceased to be material insofar as banks and non-bank financial intermediaries are concerned with respect to transactions effected from and after the effectivity date of P.D. No. 1739. From the said date, they became subject to the percentage tax rates prescribed in Section 260 of the Tax Code of 1977, as amended by P.D. No. 1739, on all its gross receipts whether derived from its banking and quasi-banking activities or from its activities as dealers in securities, lending investors or otherwise. In view thereof, Land Bank, being a specialized government bank falling within the purview of "bank" as defined under Section 2(a) of Revenue Regulations No. 12-80, is subject to the rates of percentage taxes imposed under Section 260 of the Tax Code of 1977, as amended by P.D. No. 1739, on all its gross receipts whether derived from its banking activities or from its activities as dealer in securities or as lending investor. Very truly yours, RUBEN B. ANCHETA Acting Commissioner