BIR Ruling No. 569-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

Section 5, RA No. 8367;

RMC No. 9-2016

BIR Ruling No. 046-15; BIR Ruling No. 460-14;

BIR Ruling No. 233-14

OT-0569-2020

OCT 0 1 2020

SUPREME COURT SAVINGS AND

LOAN ASSOCIATION, INC.

3rd Floor, Old Supreme Court Bldg.

Padre Faura Street, Ermita, Manila

Attention: RENE B. ENCISO President

Gentlemen:

This refers to your letter dated September 24, 2019, requesting on behalf of

SUPREME COURT SAVINGS AND LOAN ASSOCIATION, INC., for

revalidation of its tax exemption pursuant to Republic Act (RA) No. 8367, entitled, "An

Act Providing for the Regulation of the Organization and Operation of Non-Stock

Savings and Loan Associations".

It is represented that SUPREME COURT SAVINGS AND LOAN

ASSOCIATION, INC., with Taxpayer's Identification No. (TIN) S

a corporation duly organized under the laws of the Philippines; that it is registered with

the Securities and Exchange Commission (SEC) under Company Registration No.

and that it has been issued with Certificate of Authority No. to operate as

a non-stock savings and loan association by the Central Bank of the Philippines (now.

Bangko Sentral ng Pilipinas).

In reply, please be informed as follows:

Income Tax

Section 5 of RA No. 8367 provides that:

"SECTION 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.

005692028 0CT"o 1 2020

SUPREME COURT SAVINGS AND LOAN ASSOCIATION,INC.

Page 2 of 3

Interest earnings on deposits of members with Associations, as

well as the shares of its members from the net income of the Associations

shall be exempt from income tax. "

Based on the foregoing, SUPREME COURT SAVINGS AND LOAN

ASSOCIATION, INC. shall be exempt from income tax with respect to income it

receives. Also, interest income derived by it from its deposit and deposit substitutes is

exempt from twenty percent (20%) final withholding tax. (BIR Ruling No. 046-15

dated February 11, 2015 and BIR Ruling No. 460-14 dated November 13, 2014)

However, any income derived by SUPREME COURT SAVINGS AND

LOAN ASSOCIATION, INC. from any of its properties, real or personal, or any

activity conducted for profit, regardless of the disposition thereof, is subject to the

applicable income tax and other internal revenue taxes imposed under National Internal

Revenue Code of 1997, as amended. It is subject to the applicable income tax depending

on the classification of its properties as capital or ordinary asset.

Gross Receipts Tax

Section 4 of Revenue Regulations (RR) No. 9-2004, as amended, implementing

Section 122 of the National Internal Revenue Code of 1997, as amended, provides for

the imposition of Gross Receipts Tax (GRT) on Non-bank Financial Intermediaries.

Section 4 of RR No. 9-2004 states that:

"SECTION 4. Imposition of Gross Receipts Tax on Other Non-

bank Financial Intermediaries. - Gross receipts of other non-bank

financial intermediaries (non-bank financial intermediary not

performing quasi-banking functions) doing business in the Philippines shall be subject to GRT at rates and on items of income provided

hereunder:

(a) From interest, commissions, discounts and all

other items treated as gross income under the Code

5%

(b) On interests, commissions and discounts from

lending activities as well as income from financial

leasing, on the basis of remaining maturities of the

instruments from which such receipts are derived:

Maturity period is five (5) years or less - 5%

Maturity period is more than five (5) years - 1%

xxxxxxxxx

is generally subject to GRT on income derived from its operations, unless otherwise exempted under special rules. Thus, SUPREME COURT SAVINGS AND LOAN ASSOCIATION, INC.

OT0569-20LU OCT012020 SUPREME COURT SAVINGS AND LOAN ASSOCIATION, INC

Page 3 of 3

Documentary Stamp Tax

As provided under Section 5 of RA No. 8367, a non-stock savings and loan

association is only exempt from income tax.Thus, SUPREME COURT SAVINGS

AND LOAN ASSOCIATION,INC., as a non-bank financial intermediary, is subject

to Documentary Stamp Tax (DST) under the provisions of RR No. 13-2004

implementing Title VII of the National Internal Revenue Code of 1997, as amended,

particularly on loan agreements, mortgages, pledges, foreclosures and sales, among

others.

Moreover, pursuant to RR No. 9-2000, whenever SUPREME COURT

SAVINGS AND LOAN ASSOCIATION, INC. is one of the parties to a taxable

transaction, it shall be responsible for the remittance of the DST due regardless of who

will bear the burden of paying the DST.

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 shaft be considered null and void.

Very truly yours,

ua

CAESAR R.DULAY Commissioner of Internal Revenue.

036864

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