BIR Ruling No. 205-83

November 18, 1983 BIR RULING NO. 205-83 S i r : This refers to your letter dated October 25, 1983 requesting that interest income from the bank deposits of the Bureau of Prisons be exempt from withholding tax. cdta In reply, please be informed that Presidential Decree No. 177 required all government units, 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. 133, S. 1977, Secretary of Justice). Accordingly, since the Bureau of Prisons is liable to income tax, the interest on its bank deposits shall be subject to the 15% withholding tax in case of savings deposits and 20% withholding tax in case of time deposits and yield from deposit substitutes in accordance with Section 24 (cc) in relation to Section 53(d) both of the Tax Code, as amended by Presidential Decree No. 1739. However, inasmuch as the Bureau of Prisons is a government unit, it is entitled to either a tax subsidy or payments constituting equity contributions in which case, it shall not be required to pay cash or its equivalent. The revenue collecting agencies shall instead issue a "Payment Compliance Certificate" indicating the nature of the assessment and amount due. The subsidy shall be effected through Journal Vouchers or their equivalent. (See Joint Budget Circular No. 289 and pars. 4, 6 and 9. Finance Circular No. 2-78, implementing Section 23, Presidential Decree No. 1177). This serves as authority of the depository banks to forego withholding of the 15% tax on savings deposit and 20% tax in case of time deposit and yield from deposit substitutes maintained by the Bureau of Prisons with them. cdti Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue