BIR Ruling No. 209-15

June 19, 2015 BIR RULING NO. 209-15 Sec 27 (C) NIRC; RA No. 1161; RA No. 8282 Social Security System East Avenue, Diliman Quezon City Attention: Emilio S. De Quiros, Jr. President and CEO Gentlemen : This refers to your letter dated May 6, 2014 requesting for a Certification or Ruling that the Social Security System (SSS) is exempt from the payment of the twenty percent (20%) final tax on the interest and income earned from its investments in various instruments or securities like bonds, notes, and other commercial papers issued by private/government corporations and other financial institutions, in compliance with Revenue Memorandum Circular (RMC) No. 8-2014 (Presentation of Tax Exemption Certificate or Ruling by Exempt Individuals and Entities) dated February 6, 2014. In reply, please be informed that Section 16 of Republic Act (RA) No. 1161, as amended by RA No. 8282 (Social Security Act of 1997) provides: " SEC. 16. Exemption from Tax, Legal Process and Lien. All laws to the contrary notwithstanding, the SSS and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom, as well as all supplies, equipment, papers or documents shall be exempt from any tax , assessment, fee, charge, or customs or import duty, and all benefit payments made by the SSS shall likewise be exempt from all kinds of taxes, fees or charges and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the member to the SSS. No tax measure of whatever nature enacted shall apply to the SSS, unless it expressly revokes the declared policy of the State in Section 2 hereof granting tax-exemption to the SSS. Any tax assessment imposed against the SSS shall be null and void . xxx xxx xxx" (Emphasis supplied) Moreover, the tax exempt status of SSS under RA No. 1161, as amended by RA No. 8282, was further reiterated in a subsequent law, RA No. 8424, otherwise known as the " National Internal Revenue Code of 1997 " (NIRC), as amended. Section 27 (C) of the NIRC, as amended, reads as follows: "(C) Government-owned or -Controlled Corporations, Agencies or Instrumentalities . The provisions of existing special or general laws to the contrary notwithstanding, all corporations, agencies or instrumentalities owned or controlled by the Government, except the Government Service Insurance System (GSIS), the Social Security System (SSS) , the Philippine Health Insurance Corporation (PHIC), and the Philippine Charity Sweepstakes Office (PCSO), shall pay such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in a similar business, industry, or activity." Based from the foregoing provisions, the interest and other income earned by the SSS from its investments in various instruments or securities like bonds, notes, and other commercial papers issued by private/government corporations and other financial institutions, shall not be subject to income tax, and consequently, to the creditable and final withholding taxes. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. HCaDIS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue