Queries in Relation to the Promulgation of P.D. Nos. 1955 and 1959

December 4, 1985 BIR RULING NO. 215-85 29 000-00 215-85 Gentlemen : This refers to your letter dated December 13, 1984 requesting opinion on the following queries in relation to the promulgation of P.D. Nos. 1955 and 1959: 1. Are the income to be realized by Philips Multi-employer Plan by way of interest from loans to member-employees/companies, yield from investments in corporate stocks and rental income from leasing its properties subject to the final withholding tax of 15%? 2. Will it make any difference if said Plan is administered by a Trustee-Bank? In reply, please be informed as follows: 1. The income of the Philips Multi-employer Plan from its investment consisting of interest from loans to member-employees, yield from investments in corporate stocks and rental income from leasing its properties remain exempt from income tax, pursuant to Section 56(b) of the Tax Code. This is in line with Ministry Order No. 39-84 which states that the withdrawal of the exemption by P.D. No. 1955 does not apply to exemptions embodied in the National Internal Revenue Code. However, under Sections 21(d) and 53(d)(1) of the Tax Code as amended by Presidential Decree No. 1959 which took effect on October 15, 1984, a final withholding tax of 15% shall now be imposed on interest from bank deposits and yield or any monetary benefit from deposit substitutes and from trust fund and similar arrangements. (Revenue Regulations No. 17-84 and RMC No. 31-84) In view of said amendments, the Philips Multi-employer Retirement Plan is now subject to the 15% final tax on interest and/or yield on deposit substitute instruments; and interest on its savings and time deposits paid or accrued beginning October 15, 1984 . 2. There is no difference whether the Plan is administered by a trustee bank or non-bank trustee since interest income of the said Plan/Fund from bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements are now subject to a final withholding tax of 15%. cdta Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner