QC Government Interest Income Subj. to 20% Final Withholding

July 8, 1993 BIR RULING NO. 305-93 QC GOV'T. INTEREST INCOME SUBJ. TO 20% FINAL WITHHOLDING 24 (e) (1) 11-91 305-93 Tanggapan ng Ingat-yaman Lungsod Quezon Attention: Mr . Alfredo D . Mercado City Treasurer This refers to your letter dated May 6, 1993 requesting clarification as to whether or not the Quezon City Government is subject to the final income tax of 20% on interest from bank deposits and to furnish you with the law or regulation decreeing that local government units are subject to the said final tax. In reply, please be informed that Presidential Decree No. 1177 (July 30, 1977) and P.D. No. 1931 (June 11, 1984) have withdrawn the tax and duty exemption privileges, including the preferential tax treatment of all units of government, i.e., the National Government, its agencies and political subdivisions, as well as the government-owned or controlled corporations. Corollary to this, Executive Order No. 93 effective March 10, 1987 withdrew all tax and duty incentives granted to government and private entities, subject to certain exceptions. Accordingly, the Quezon City government's interest income from Philippine currency deposits and yield from deposit substitutes, trust fund and similar arrangement is subject to the 20% final withholding tax pursuant to Section 24(e) in relation to Section 50(a) of the Tax Code, as amended (RMC No. 1-85 dated January 10, 1985). aisadc LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue