DUMAGUETE CATHEDRAL CREDIT COOPERATIVE vs. COMMISSIONER OF INTERNAL REVENUE- Withholding Tax
Petitioner was assessed for deficiency withholding taxes on interest from savings and time deposits of its members. The CTA ruled against the Petitioner and claimed that the withholding of tax on income payments subject to final withholding tax includes the said interest as "interest from x x x similar arrangements . . ."
Is Petitioner liable for the deficiency Withholding Tax?
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, 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 that those subject to withholding must have deposit peculiarities. This is consistent with the preferential treatment accorded to members of cooperatives who are exempt in the same way as the cooperatives themselves.