Interest Earnings on Bank Deposits and Money Market Placements of a Diplomatic Agent are Exempt from Income Tax

December 17, 1981 BIR RULING NO. 275-81 24-cc 000-00 275-81 Union Bank Bancom I Building Pasay Road Makati, Metro Manila Attention: Mr . Marcial S . Ezequiel Asst . Vice President Gentlemen : This refers to your letter dated September 16, 1981 requesting that a certificate of withholding tax exemption be issued in favor of the Apostolic Nunciature for its interest earnings on bank deposits and money market placements maintained in your Bank since as a member of the Diplomatic Corps, the Apostolic Nunciature is accorded with tax exemption privileges as provided for under Article 34 of the Vienna Convention on Diplomatic Relations adopted on April 18, 1961, which is quoted hereunder as follows: "Art. 34. A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except a. indirect taxes of a kind which are normally incorporated in the price of goods or services; b. dues and taxes on private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purpose of the mission; c. estate, succession or inheritance duties levied by the receiving State, subject to the provisions of paragraph 4 of Article 39; d. dues and taxes on private income having its source in the receiving State and capital taxes on investments made in commercial undertakings in the receiving State; e. charges levied for specific services rendered; f. registration, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of Article 23." In reply, I have the honor to inform you that since tax on interest earnings on bank deposits and money market placements maintained by the Apostolic Nunciature as a member of the Diplomatic Corps does not fall within the purview of anyone of the aforementioned exceptions, it follows that said interest earnings are exempt from income tax and therefore exempt from the rates of final withholding tax prescribed by Section 24(cc) of the Tax Code, as amended by Presidential Decree No. 1739. cdta Very truly yours, RUBEN B. ANCHETA Acting Commissioner