Tuesday February 20 , 2018

Revocation of BIR Ruling DA(FIT-002) 054-2010 which subjected onshore income of FCDU/OBU to 5% GRT

BIR Ruling No. 51-2010
dated September 7, 2010

The Bureau of Internal Revenue (BIR) has revoked its previous ruling which subjected the onshore interest income to be derived by the foreign currency deposit units (FCDUs) from the 3-year and 5-year Multi-Currency Retail Treasury Bonds for Overseas Filipino Workers (rTBs) issued by the Bureau of Treasury to the 5% gross receipts tax, aside from the 10% final withholding tax.

The BIR now clarifies that the said previous ruling is contrary to the provisions of Republic Act No. 9294, which restored the exemption of FCDUs from all taxes on its foreign currency transactions, except for the 10% final withholding tax on onshore income. With the said amendment, the tax exemption enjoyed by FCDUs under the 1977 Tax Code was clearly restored, which includes exemption from the gross receipts tax.

Hence, the onshore interest income to be derived by FCDUs from the said rTBS issued by the Bureau of Treasury is exempt from the 5% gross receipts tax.

Please be advised accordingly.

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