Peace Bonds are not considered deposit substitutes and are therefore not subject to a 20% final withholding tax on interest. The Supreme Court case involved eight banks and their principal over whether zero coupon Peace Bonds were deposit substitutes subject to taxation. The Court determined the Peace Bonds were not deposit substitutes as there was no adequate showing of borrowing from the public. However, if the bonds had been simultaneously sold between the Bureau of Treasury, banks, and over 20 investors, they could be seen as deposit substitutes.
Peace Bonds are not considered deposit substitutes and are therefore not subject to a 20% final withholding tax on interest. The Supreme Court case involved eight banks and their principal over whether zero coupon Peace Bonds were deposit substitutes subject to taxation. The Court determined the Peace Bonds were not deposit substitutes as there was no adequate showing of borrowing from the public. However, if the bonds had been simultaneously sold between the Bureau of Treasury, banks, and over 20 investors, they could be seen as deposit substitutes.
Peace Bonds are not considered deposit substitutes and are therefore not subject to a 20% final withholding tax on interest. The Supreme Court case involved eight banks and their principal over whether zero coupon Peace Bonds were deposit substitutes subject to taxation. The Court determined the Peace Bonds were not deposit substitutes as there was no adequate showing of borrowing from the public. However, if the bonds had been simultaneously sold between the Bureau of Treasury, banks, and over 20 investors, they could be seen as deposit substitutes.
use the image below as your guide. Peace Bonds are NOT Substitutes the case decided by the Supreme Court by involving eight banks and its principal the issue of the taxability of interest income in a zero coupon bonds known as PEACe Bonds deposit substitutes subject to taxations. The Supreme Court did not consider the PEACe Bonds as deposit substitutes and not subject to the 20 percent final withholding tax on the interest on deposit substitutes due to the failure to adequately show that there was borrowing from the public. There was, however, a qualification that should there have been a simultaneous sale of the bonds from BTr and RCBC/CODE-NGO and from RCBC/CODE-NGO to the undisclosed investors, and the total number of the investor/lender exceeded twenty (20), the PEACe Bonds would have been considered as deposit substitutes.