Interest Income of a Non-profit, Non-stock Foundation from Deposits with a Commercial Bank is Subject to 20% Final Withholding Tax

October 1, 1991 BIR RULING NO. 199-91 26 199-91 Gentlemen : This refers to your letter dated June 30, 1991 requesting, in effect, a ruling as to whether Santiago Cagayan Scholarship Foundation, Inc. (Foundation) is subject to the 20% final withholding tax on its interest income from deposits with a commercial bank. It appears that in a letter of the Revenue Regional Director of Tuguegarao, Cagayan dated April 17, 1991, the Foundation is considered as non-profit, non-stock organization operated for charitable and social welfare purposes as contemplated under Section 26 (e) and (g) of the Tax Code, as amended. In reply, please be informed that the said Foundation is exempt from the payment of income tax on income received by it as such organization, and, therefore, need not file an income tax return concerning such income. However, it is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code on its income derived from any of its properties, real or personal or any activity conducted for profit regardless of the disposition thereof which income should be returned for taxation. Accordingly, the Foundation's interest income from Philippine currency bank deposits and yield or any other monetary benefit from deposit substitute instruments are subject to the 20% final withholding tax pursuant to Section 24 (e) (1) in relation to Section 50 (a) both of the Tax Code, as amended. cdti Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner and Officer-in-Charge