SC junks tax on PEACe bonds

ABS-CBN News

Posted at Mar 03 2015 02:28 PM | Updated as of Mar 04 2015 12:00 AM

MANILA (UPDATE) – Metrobank said it has received a favorable ruling from the Supreme Court on the government's controversial  Poverty Eradication and Alleviation Certificates (PEACe) Bonds.

The bonds are doubly controversial because of the unique circumstances of their sale in 2001, and a Bureau of Internal Revenue (BIR) ruling on the bond's payback in 2011.

Aside from Metrobank, BDO, Bank of Commerce, China Bank, PBCom, PNB, Plantersbank, and Philippine Veterans Bank questioned the ruling, which imposed the usual 20 percent withholding tax on interest earnings even if the bonds were designed to be exempt from the tax.

The BIR said the treasury had erred when it granted the exemption in 2001.

According to Metrobank, the Supreme Court nullified the BIR ruling and ordered the government to release to the banks, which had bought the bonds the 20 percent interest earnings it had withheld.

BIR chief Kim Henares said the agency will file a motion for reconsideration. -- ANC