Tax Liability of PCSO

October 2, 1981 BIR RULING NO. 193-81 53-e 124-81 193-81 Philippine Charity Sweepstakes Office M a n i l a Attention: Mr . Mario Ll . Rama Chairman-General Manager Gentlemen : This refers to your letters dated April 8 and October 14, 1980 requesting 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 and the refund of P695,302.34 as alleged withhold taxes on interests of your bank deposits. In reply, please be informed that although PCSO is a tax-exempt government agency under Republic Act No. 1169 as amended by Batas Pambansa Blg. 42, its exemption has been superseded by Section 23 of Presidential Decree No. 1177, which requires government-owned or controlled corporations to pay income taxes, customs duties and other taxes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, the PCSO is liable to income tax; its interest income is subject to the rates of final withholding tax prescribed by Section 24 (cc) in relation to Section 53(e) both of the Tax Code, as amended by P.D. No. 1739. However, inasmuch as the PCSO is a tax-exempt government agency, it shall be entitled to either a tax subsidy or payments 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). As regards your claim for refund of P695,302.34 as alleged taxes already withheld from the interest of your bank deposits as of December 31, 1979 the same will be given due course subject to the provisions of Section 295 of the Tax Code, as amended. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner