BIR Ruling [UN-230-94]

July 29, 1994 BIR RULING [UN-230-94] Atty. Caridad Valdehuesa Treasurer Bureau of Treasury Palacio del Gobernador Bldg. Intramuros, Metro Manila M a d a m : In connection with your fax message dated July 20, 1994 relative to your observations/problems/recommendations on BIR Ruling UN, 213-94 dated July 14, 1994, please be informed as follows: (1) That if the treasury note is issued at a premium, the interest coupons representing the interest or yield shall be subject to the 20% final withholding tax which is due and payable upon payment on every date of payment stipulated in the covenants for its issuances. (2) That the premium or income from trading of said treasury notes is subject to income tax at the rates prescribed under Section 21 (f) of the Tax Code in the case of a citizen or resident trader or as prescribed under Section 24 (a) in the case of a domestic corporation lender. Your proposal for a netting system instead cannot be granted for lack of legal basis. (3) That this Office cannot simply rule that the secondary market trading of government securities is not subject to documentary stamp tax without any qualification. Secs. 6 and 10 of the Documentary Stamp Tax Regulations as amended is explicit that the transfer of treasury notes which carries with it the renewal or issuance of new treasure notes in the name of the transferee to replace the old ones is subject to the documentary stamp tax under Section 180 of the Tax Code, as amended. (BIR Ruling No. 119-91 dated June 25, 1991, BIR Ruling dated June 10, 1987). cdtech Very truly yours, ALICIA P. CLEMENO Acting Assistant Commission Legal Service