Interests on Bank Deposits of the Technology Resource Center Shall be Subject to Withholding Tax

December 16, 1981 BIR RULING NO. 274-81 53-c 002-80 274-81 Technology Resource Center TRC Bldg., Buendia Avenue Ext. Makati, Metro Manila Attention: Mr . Arthur M . Alvendia Gentlemen : This refers to your letter dated January 5, 1981, requesting exemption of the interest income of the TECHNOLOGY RESOURCE CENTER (TRC) from the withholding tax provision of Section 53(e) of the Tax Code, as amended by Presidential Decree Nos. 1156 and 1739. In reply, please be informed that although under Section 12 of Presidential Decree No. 1097, TRC is exempt from taxes, the said tax exemption privilege is deemed to have been revoked by Presidential Decree No. 1177, effective July 30, 1977, which requires all government units, government-owned or controlled corporations to pay income taxes,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 TRC is liable to income tax, the interests on its bank deposits shall be subject to the 15% withholding tax in case of savings deposit and 20% in the case of time deposits and yield from deposit substitute, in accordance with Section 24 (cc) in relation to Section 53(e) both of the Tax Code, as amended by P.D. No. 1739. However, inasmuch as TRC is a tax exempt government unit, it is entitled to a tax subsidy, in which case, it shall not be required to pay cash or 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 Paragraphs 4, 6 and 9, Finance Circular No. 2-78, implementing Section 23, Presidential Decree No. 1177). cdta Very truly yours, RUBEN B. ANCHETA Acting Commissioner