BIR Ruling No. 460-14

November 13, 2014 BIR RULING NO. 460-14 Sec. 5, Republic Act No. 8367; BIR Ruling No. 525-2012 PNB Employees Savings and Loan Association, Inc. 2nd Floor, PNB Financial Center Pres. D. Macapagal Blvd. Pasay City Attention: Cipriano G. Resultay President Gentlemen : This refers to your letter dated October 30, 2013, requesting on behalf of the PNB Employees Savings and Loan Association, Inc. ("PESLAI") revalidation of its certificate of exemption from the twenty percent (20%) final withholding tax on its interest income from bank deposits pursuant to Republic Act (RA) No. 8367, approved on October 21, 1997 and which took effect on November 14, 1997. Documents submitted show that PESLAI, with Tax Identification No. 000-983-498-000, is a non-stock corporation duly organized under the laws of the Philippines, with office address at 2nd Floor, PNB Financial Center, Pres. D. Macapagal Blvd., Pasay City; that it is registered with the Securities and Exchange Commission (SEC) under SEC Certificate of Registration No. 8793; that it is recognized by the government and permitted by the Bangko Sentral ng Pilipinas (BSP) to operate as a Non-Stock Savings and Loan Association per Certification dated January 30, 2014 issued by Ma. Belinda G. Caraan, Director of the Integrated Supervision Department I of the BSP; and that the exemption of PESLAI from the twenty percent (20%) final withholding tax on its interest income derived from bank deposits had already been confirmed by this Office in BIR Ruling No. DA (TSF-009) 696-2009 dated November 23, 2009 . In reply, please be informed that Section 5 of Republic Act No. 8367, entitled: "An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations", provides, viz. : "SEC. 5. Tax Exemption. An Association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank; Provided, however, That income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. "Interest earnings on deposits of members with Association, as well as the shares of its members from the net income of the Associations shall be exempt from income tax." EDISTc Based on the foregoing, interest income derived by PESLAI from its bank deposits is exempt from twenty percent (20%) final withholding tax ( BIR Ruling No. 525-2012 dated August 23, 2012 ). However, income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. 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