BIR Ruling No. 455-2019

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Section 5, RA No. 8367; BIR Ruling No. 046-15; BIR Ruling No. 460-14; RMC No. 9-2016 BIR Ruling No. 233-14

04552019 AUG Z 8 ZuT3

3/F SGV I Bldg.,6760 Ayala Avenue, Makati City 1000 CERTIFIED SAVINGS AND LOAN ASSOCIATION, INC.

Attention: FRANCES ROSE J. VILLAMAYOR Chairman

Gentlemen:

for revalidation of its tax exemption pursuant to Republic Act (RA) No. 8367, entitled. " An Act Providing for the Regulations of the Organization and Operation of Non-Stock CERTIFIED SAVINGS AND LOAN ASSOCIATION, INC. ("CSLA" for brevity): Savings and Loan Association". This refers to your letter dated December 27, 2013, requesting on behalf of

registered with the Securities and Exchange Commission (SEC) under Company the Philippines (now, Bangko Sentral ng Pilipinas). Registration No. It is represented that CSLA with Taxpayer's Identification No. (TIN) to operate as a non-stock savings and loan association by the Central Bank of is a corporation duly organized under the laws of the Philippines; that it is ; and that it has been issued with Certificate of Authority No

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 any of its properties, real or personal, or any activity conducted corresponding. internal revenue taxes imposed under the National Internal Revenue Code. from payment of tax in respect to income it receives, including interest on its deposits with any bank; Provided, however, That income derived "SECTION 5. Tax Exemption. - An Association shall be exempt

shall be exempt from income tax." well as the shares of its members from the net income of the Associations Interest earnings on deposits of members with Associations, as

CERTIFIED SAVINGS AND LOAN ASSOCIATION, INC. 0455-2019 AUG 2 8 2019 Page 2 of 3

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, Based on the foregoing, CSLA shall be exempt from income tax with respect

2014)

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 income tax depending on the classification of its properties as capital or ordinary asset. National Internal Revenue Code of 1997, as amended. It is' subject to the applicable However, any income derived by CSLA from any of its properties, real or

Gross Receipts Tax

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

Section 4 of RR No. 9-2004 states that: 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. Imposition of Gross Receipts Tax on Other Non-

performing quasi-banking functions) doing business in the Philippines financial intermediaries (non-bank financial intermediary not shall be subject to GRT at rates and on items of income provided Bank Financial Intermediaries. - Gross receipts of other non-bank

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

unless otherwise exempted under special rules. Thus, CSLA is generally subject to GRT on income derived from its operations,

Documentary Stamp Tax

association is only exempt from income tax. Thus, CSLA, as a non-bank financial No. 13-2004 implementing Title VII of the National Internal Revenue Code of 1997. intermediary, is subject to Documentary Stamp Tax (DST) under the provisions of RR As provided under Section 5 of RA 8367, a non-stock savings and Ioan

CERTIFIED SAVINGS AND LOAN ASSOCIATION, INC. Page 3 of 3 0455 -2019 AUG 2 8 2019

as amended, particularly on loan agreements, mortgages, pledges, foreclosures and sales, among others.

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. Moreover, pursuant to RR No. 9-2000, whenever CSLA is one of the parties to

However, if upon investigation, it will be disclosed that the facts are different, then this ruling shaft be considered nuil and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours

e

Commissioner of Internal Revenue CAESAR R. DULAY

028090

K-1-JAC