Friday, January 29, 2016

Dumaguete Cathedral Credit Cooperative vs. CIR


FACTS: Petitioner was assessed for deficiency withholding taxes on interest from savings and time deposits of its members. The CTA ruled against the petitioner and said that the withholding of tax on income payments subject to final withholding tax includes the said interest as “interest from xxx similar arrangement...”

ISSUE: Whether or not petitioner is liable for the deficiency withholding tax

RULING: No. The BIR had earlier ruled without any qualification that since interest from any Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes are paid by banks, other entities such as cooperatives are not required to withhold the corresponding tax on the interest from savings and time deposits of their members. The fact that “similar arrangements” is preceded by banking terms means that those subject to withholding must have deposit peculiarities. This is also consistent with the preferential treatment accorded to members of cooperatives who are exempt in the same way as the cooperatives themselves.

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