Retirement Plan Fund is Now Subject to the 20% Final Tax on Interest

November 3, 1987 BIR RULING NO. 334-87 29 215-85 334-87 Gentlemen : This refers to your letter dated August 14, 1987 requesting a ruling as to whether interest income derived by the retirement fund from direct loans made by it are subject to the 20% withholding tax. In reply thereto, I have the honor to inform you that income of retirement fund from its investments consisting of interest from loans is exempt from income tax pursuant to Section 56(b) of the Tax Code, as amended. This is in line with Ministry Order No. 39-84 which states that the withdrawal of the exemption by P.D. No. 1955 does not apply to exemptions embodied in the National Internal Revenue Code. atdc However, in view of the amendment of Section 21(c)(1) in relation to Section 51(a) of the Tax Code by Executive Order No. 37 which took effect on August 1, 1986, retirement plan fund is now subject to the 20% final tax on interest and/or yield on deposit substitute instruments and interest on its savings and time deposits paid or accrued beginning August 1, 1986. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner