BIR Ruling No. 368-12

May 31, 2012 BIR RULING NO. 368-12 Section 4 (3), Article XIV, 1987 Constitution; Department Order No. 149-95; BIR Ruling No. RR-6B-20, November 14, 1989 Deutsche Bank AG Manila 26th Floor, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue 1226 Makati City, Philippines Attention: Ma. Teresa R. Toledo Head, Institutional Sales Paulino G. Erjas Head, Operations Gentlemen : This refers to your letter dated 19 March 2012 requesting for revalidation of the exemption from the 20% and 7.5% final taxes on interest income from local bank deposits and foreign currency deposits of ST. JOSEPH SCHOOL LA SALLE (BACOLOD), INC. Documents submitted show that BIR Ruling No. RR-6B-20, dated 14 November 1989, was issued in favor of ST. JOSEPH SCHOOL LA SALLE (BACOLOD), INC., wherein it was declared that being an educational institution, it is exempt from the 20% and 7.5% final taxes on interest income from local bank deposits and foreign currency deposits. In reply, please be informed that the exemption of the above mentioned school from payment of the 20% final tax and 7.5% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the National Internal Revenue Code of 1997, as amended, remains valid and subsisting. Under Department Order No. 149-95 dated November 24, 1995 amending Department Order No. 137-87, interest income from currency bank deposits and yield from deposit substitute instruments used actually, directly and exclusively in pursuance of its purpose as an educational institution, are exempt from the 20% final tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the Tax Code of 1997, subject to compliance with the conditions that as a tax-exempt educational institution, it shall on an annual basis submit to the Revenue District Office concerned an annual information return and duly audited financial statement together with the following: (a) Certification from their depository banks as to the amount of interest income earned from passive investment not subject to the 20% final withholding tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed by Section 27 (D) (1) of the Tax Code of 1997; (b) Certification of actual utilization of the said income; and aTHCSE (c) Board Resolution by the school administration on proposed projects ( i.e. construction and/or improvement of school buildings and facilities, acquisition of equipment, books and the like) to be funded out of the money deposited in banks or placed in money markets, on or before the 15th day of the fourth month following the end of its taxable year (Sec. 4, Finance Department Order No. 137-87). 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue