BIR Ruling No. 454-2020

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNALREVENUE

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

0T-0454-2020

National Power Corporation Sports Complex, Quezon Avenue cor. BIR Road, Diliman, Quezon City 1104 NPC SAVINGS AND LOAN ASSOCIATION AUG 1 8 2020

Attention: ROLANDO T. BACANI President

Gentlemen:

8367, entitled: "An Act Providing for the Regulations of the Organization and from deposits and deposit substitutes with the banks pursuant to Republic Act (RA) No. of exemption from the twenty percent (20%) final withholding tax on interest income Operation of Non-Stock Savings and Loan Association". This refers to your letter dated September 5, 2013 requesting for reconfirmation

Registration No. organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Company Registration No. principal office at NPC`Sports Complex, Quezon Avenue cor. BIR Road, Diliman. Quezon City; and that the Bangko Sentral ng Pilipinas (BSP), Integrated Supervision Department I, issued a Certification dated February 13, 205 stating that: withTaxpayer's Identification No.(TIN It is represented that NPC SAVINGS AND LOAN ASSOCIATION,INC. dated January 1, 1997, is a corporation duly and Certificate of that it holds its

1. NPC SAVINGS AND LOAN ASSOCIATION,INC.is a duly registered non-stock savings and loan association, authorized to 8367, and continues to operate as a non-stock savings and loan association under the supervision of the BSP; and operate under Republic Act (RA) No. 3779, as amended by RA No.

2 The Certificate of Authority No. authorizing the Association to operate as a non-stock savings and loan association, remains to be valid and existing. dated March 18, 1974

In reply, please be informed as follows:

Income Tax

Section 5 of RA No. 8367 provides that:

for profit, regardless of the disposition thereof, is subject to the from payment of tax in respect to income it receives, including interest from any of its properties, real or personal, or any activity conducted on its deposits with any bank: Provided, however, That income derived "SECTION 5.Tax Exemption.-An Association shall be exempt

454-2020

UG 13 2020

NPC SAVINGS AND LOAN ASSOCIATION,INC

corresponding internal revenue -taxes imposed under' the National

Internal Revenue Code.

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, NPC 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 are 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)

ASSOCIATION, INC. from any.of its properties, real or personal, or any activity However, any .income derived by NPC. SAVINGS AND LOAN

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

Code of 1997, as amended. It is subject to the applicable income tax depending on the classification of its properties either capital or ordinary asset. income tax and other internal revenue taxes imposed under National Internal Revenue

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

instruments from which such receipts are derived: leasing, on the basis of remaining maturities of the

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

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

xxx. xxxxxx"

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

Documentary Stamp Tax

Documentary Stamp Tax (DST) under the provisions of RR No. 13-2004 implementing association is only exempt from income tax.Thus,NPC SAVINGS AND LOAN ASSOCIATION INC. as a non-bank financial intermediary, is subject to As provided under Section 5 of RA 8367, a non-stock savings and loan

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NPC SAVINGS AND LOAN ASSOCIATION, INC. 0TA0454-Z020 AUG 1 8 2020

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 NPC 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,

Masconrnea

CAESAR R. DULAY

Commissioner of.Internal Revenue

036020

K-1-JAC K1-FR-13-2073

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