BIR Ruling No. 225-14

June 25, 2014 BIR RULING NO. 225-14 Sec. 5, RA No. 8367; BIR Ruling No. 538-12; BIR Ruling No. 527-12 Water and Sewerage Sector Savings and Loan Association, Inc. MWSS Complex, Katipunan Road, Balara, Quezon City Attention: Mr. Jose M. Cadorna Chairman-President Gentlemen : This refers to your letter dated September 6, 2013, requesting in behalf of WATER AND SEWERAGE SECTOR SAVINGS AND LOAN ASSOCIATION, INC. (WASSSLAI for brevity) for the issuance of a Certificate of Tax Exemption in accordance with Section 5 of Republic Act (RA) No. 8367. It is represented that WASSSLAI, with Taxpayer's Identification Number (TIN) 000-846-433-000, is a non-stock savings and loan association duly organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Registration No. AN091-192194 dated June 19, 1991; that the purpose for which the corporation was incorporated is: "to engage in the operations of a non-stock savings and loan association; encourage industry, frugality and accumulation of savings among the members; to extend loans to members and/or make investments in the securities of productive enterprises or in securities of the Government or any of its political subdivisions, instrumentalities or corporations; and generally to exercise and execute all the powers, prerogatives and privileges inherent in and granted to corporations and to such savings and loan association, primarily for the benefit and interest of its members"; and that it is authorized to operate as a Non-Stock Savings and Loan Association under RA No. 8367 by the Bangko Sentral ng Pilipinas (BSP) on September 6, 1991. In support of its request, WASSSLAI submitted the following documents: CIcTAE 1. Letter request for tax exemption; 2. Certification from the BSP that Certificate of Authority with number NS-086 issued by the BSP on September 6, 1991 to ESLA-MSWW, now referred to as WASSSLAI remains valid and existing; 3. Certified true copy of SEC Certificate of Registration; 4. Certified true copy of the Articles of Incorporation; 5. Certified true copy of the By-Laws; 6. Copy of BIR Certificate of Registration; 7. Certification under Oath by the Treasurer of the association as to the amount of income/emoluments received by its trustees/officers; 8. Certification under Oath by the Chairman-President that there are no previous amendments/changes in the Articles of Incorporation and By-laws, manner of activities, and sources and disposition of income of the association; 9. Certification under Oath by the Chairman-President as to the association's Modus Operandi ; and 10. Annual Information Return and Financial Statements for the last three (3) years. In reply, please be informed that Section 5 of Republic Act No. 8367, entitled: "An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations", provides, viz. : SIaHDA "SEC. 5. Tax Exemption. An Association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank; Provided, however, That income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. Interest earnings on deposits of members with Association, as well as the shares of its members from the net income of the Associations shall be exempt from income tax." Based on the foregoing, interest income derived by WASSSLAI from its deposit and deposit substitutes are exempt from twenty percent (20%) final withholding tax. (BIR Ruling No. 538-12 dated August 29, 2012 and BIR Ruling No. 527-12 dated August 23, 2012) 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue