Back

Commissioner of Internal Revenue (CIR) vs. Bank of the Philippine Islands (BPI) 492 SCRA 551

COMMISSIONER OF INTERNAL REVENUE, Petitioner, versus BANK OF THE PHILIPPINE ISLANDS, Respondent.

G.R. No. 147375 | 2006-06-26

D E C I S I O N 


Tinga, J.:

At issue is the question of whether the 20% final tax on a bank's passive income, withheld from the bank at source, still forms part of the bank's gross income for the purpose of computing its gross receipts tax liability. Both the Court of Tax Appeals (CTA) and the Court of Appeals answered in the negative. We reverse, in favor of petitioner, following our ruling in China Banking Corporation v. Court of Appeals.[1] 

A brief background of the tax law involved is in order. 

Domestic corporate taxpayers, including banks, are levied a 20% final withholding tax on bank deposits under Section 24(e)(1)[2]...