20% Final Withholding Tax on Interest and/or Yield on Deposit Substitute Instruments of FPPI

July 18, 1988 BIR RULING NO. 329-88 24 000-00 329-88 Gentlemen : This refers to your letter dated May 26, 1988 requesting exemption of your client, Foster Parent's Plan, Inc. (FPPI) from all taxes, duties and fees relative to its interest income from its bank deposits and/or investments. It is represented that FPPI is a non-profit, non-denominational child welfare agency registered with the Advisory Committee on Voluntary Foreign Aid of the International Cooperative Administration, approved by the United States Government and accepted by the Philippine Government on March 15, 1961 per Diplomatic Note 694-61, as a voluntary agency qualified to participate in the voluntary relief agreement between the Philippines and the United States Government; that it is purely humanitarian in character and conducts programs for the care, maintenance, education, training and well being of children orphaned and distressed or otherwise made destitute; that on August 8, 1964, R.A. 4169 was passed extending to the FPPI exemption from the payment of gift, franchise, specific, percentage, real property and all other taxes, duties and fees; and that FPPI will be investing/depositing some of its peso funds with a local commercial bank. In reply thereto, I have the honor to inform you that the tax exemption of FPPI under Republic Act No. 4169 has been withdrawn by Presidential Decree No. 1955 effective October 15, 1984. Moreover, Executive Order No. 93 effective March 10, 1987 withdrew all tax and duty incentives granted to government and private entities. Such being the case, interest and/or yield on deposit substitute instruments and interest on savings and time deposits of FPPI are subject to the 20% final withholding tax prescribed under Section 24(e) of the Tax Code, as amended. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner