BIR Ruling No. 293-14

July 23, 2014 BIR RULING NO. 293-14 Revenue Regulations No. 02-98, as amended; Nesic Phils., Inc. vs. CIR, CTA Case No. 7012 dated March 13, 2009; BIR Ruling No. 026-2010 Bangko Sentral Ng Pilipinas Office of the Deputy Governor Supervision and Examination Sector Attention: Nestor A. Espenilla, Jr. Deputy Governor Gentlemen : This refers to your letters dated April 7, 2014 and May 30, 2013 requesting confirmation of your opinion that penalties collected from banks and non-bank financial institutions with quasi-banking functions are not subject to the creditable withholding tax (CWT) under Revenue Regulations (RR) No. 02-98, as amended. In reply, please be informed that this Office has already ruled that transactions subject to the withholding tax scheme as enumerated in RR No. 02-98, as amended, are exclusive and income payments which are not among those specifically subject to withholding tax under the said Regulations are exempt from withholding tax. ( BIR Ruling No. 026-2010 dated August 9, 2010 ) An income payment which is not enumerated under RR No. 02-98 cannot be subject to CWT. ( Nesic Phils., Inc. vs. CIR, CTA Case No. 7012 dated March 13, 2009) Such being the case, and since the collection by the BSP of penalties from banks and non-bank financial institutions with quasi-banking functions is not one of the items subject to CWT under RR No. 02-98, as amended, this Office hereby confirms your opinion that said collection of penalties by BSP is not subject to CWT. 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. acHCSD Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue