BIR: Govt did not violate SC order on PEACe bonds

Government did not violate a Supreme Court order stopping the Bureaus of Treasury (BTr) and Internal Revenue (BIR) from withholding a 20-percent final tax on the yield and discount on the PEACe bonds, the BIR said Friday. “The BTr received the order on October 19. The bonds matured on October 18," said BIR Commissioner Kim Henares. Holders of the 10-year zero-coupon Poverty Eradication and Alleviation Certificate (PEACe) bonds were paid on Oct. 18, according to the BIR. The 20-percent final withholding tax of roughly P5 billion was also withheld. The Supreme Court issued a temporary restraining order against government after Banco de Oro Universal Bank, Bank of Commerce, China Banking Corp., Metropolitan Bank & Trust Co., Philippine Bank of Communications, Philippine National Bank, Philippine Veterans Bank and the Planters Development Bank filed a petition against the final tax. The banks noted that the withholding tax was not in the 2001 agreement covering the PEACe bonds. Since the TRO was received a day after the tax was been withheld, compliance with the order was no longer possible, the Department of Finance said in a separate statement Friday. “Section 58 of the Tax Code provides that the taxes deducted and withheld by the withholding agent shall be held as a special fund in trust for the government until paid to the collecting officers," the Finance department said. “Without a law giving it such authority, the Bureau of Treasury, by itself, has no power to contractually grant a tax exemption in favor of the petitioners since such power is exclusively legislative," the Finance Department said. — VS, GMA News