BIR Ruling No. 432-2021

xSTER* REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OFINTERNAL REVENUE Quezon City Section 5 of Republic Act No. 8367 BIR Ruling No. 525-2012 Of- 4 5 2 - X 0 2:1 wrnozr: BIR Savings and Loans Association,Inc. r'Floor DPC Bldg., BIR^ational Office Compund,Diliman,Quezon City Attention Geaidina E.Reves President Gentlemen: This refers to your etter dated September 26,2021 requesting on behalf ofBIR Savings and Loan Association, Inc (BIRSALA)for revalidation of Bureau of Intemal Revenue (BIR) Ruling No. 525-2012, anc. confirmation of exemption from the Twenty Percent (20%) final withholding tax on its inte nest income derived from deposit and deposit substitutes pursuant to Section 5 ofRepublic Act(RA)No.8367. It is represented that BIRSALA with Taxpayer's Identification No.(TIN) 000 and Certificate of Registration No. OCN ,is a non-stock corporation duly organized under the laws ofthe Philippines;that itis registered with the Securities and Exchange Commission(SEC)under Company Registration No. ; and that a Certificate ofAuthority No. wasissued bythfe Bangko Central ngPilipinas(BSP)infavorofBIRSALA authorizing the latter to operate as a Nonstock Savings and Loan Association(NSSLA)under6A No.8367. In reply,please be itiformed that Section 5 ofRA No.8367 provides,asfollows: Section 5. Tax exemption.~An Association shall be exemptfrom payment oftax in respect to income it receives, including interest on its deposits with any bank:Provided, however, that income derivedfrom any ofits properties, real or personal,or anyaciivity conductedforprofit, regardless ofthe disposition thereof, is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code. Interest earn\ings on deposits ofmembers with Associations as well as the shares ofits member',sjrom the netincome ofthe Associationsshall be exemptfrom income tax. Clearly,the law exempts all interest earnings received by an Association,which qualify as an NSSLA,on its income derived from deposits with any bank,as well as,those interest earnings received by its members from their deposit with,and shares from the netincome ofAssociation.