Collection of the Annual Supervisory Fees (ASF) for the Year 2017

February 16, 2017 BSP MEMORANDUM NO. M-2017-005 TO : All Banks and Non-Banks with Quasi-Banking (NBQBs) Functions SUBJECT : Collection of the Annual Supervisory Fees (ASF) for the Year 2017 Pursuant to Subsections X901.1 (2008-X608.1) and 4901Q.1 (2008-4652Q) of the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), respectively, the following guidelines shall govern the computation and collection by the Bangko Sentral ng Pilipinas (BSP) and the payment by Banks and NBQBs of the 2017 ASF. 1. Computation of ASF for 2017 The ASF is based on the Average Assessable Assets (AAA) of the preceding year multiplied by the applicable assessment rates approved by the Monetary Board as follows: Type of Financial Institution Applicable Rate Universal/Commercial Banks 1/28 of 1% Thrift Banks 1/28 of 1% Rural/Cooperative Banks 1/40 of 1% NBQBs 1/28 of 1% The AAA of the preceding year is derived from the reports 1 submitted by the bank/NBQB to the BSP in compliance with the standards and requirements prescribed under existing regulations. In case of a merger or consolidation, the assets of the covered institutions prior to the merger or consolidation as well as the assets of the newly formed institution shall be considered in determining the AAA. In case of upgrading or downgrading, the assets from one bank category to another shall likewise be considered in determining the AAA. The collection of the 2017 ASF shall take into consideration events subsequent to the collection of the 2016 ASF, particularly for submitted amendments to the prescribed reports used in deriving the AAA that would warrant a recomputation of the 2016 ASF. In such cases, the resulting over or under-payment of the 2016 ASF shall be deducted/added to the 2017 ASF. Sample computations to illustrate potential permutations of the above described scenarios are provided in Annex A. 2. Notification of Amount due for 2017 and Mode of Payment The BSP Supervisory Data Center (SDC) shall send a billing notice in March 2017 to the Bank/NBQB for its ASF payment indicating, among others, the computation of the ASF due, including the 2% creditable withholding tax (CWT) thereon, if applicable, the period covered by the ASF and the specific date when the ASF will be debited from the Bank's/NBQB's Demand Deposit Account (DDA) with the BSP. The BSP will not accept checks as mode of ASF payment. Banks/NBQBs, upon receipt of the ASF billing notice from the BSP, should maintain adequate balance in their DDA to cover the ASF and other daily obligations and, when necessary, make corresponding deposits to fully cover said obligations. In case of deficiency, the provisions on DDA deficiency in Subsections X901.1 (2008-X608.1) and 4901Q.1 (2008-4652Q) of the MORB and MORNBFI, respectively, as amended, shall apply. ICHDca 3. Exceptions Noted on Billing Notice of 2017 ASF Upon receipt of the BSP Notice of ASF billing, a Bank/NBQB is encouraged to check the accuracy of the billing and to submit any of the noted exceptions therein not later than ten (10) days before the specified date of collection/debit to DDA as indicated in the billing notice. The said exceptions, together with supporting documents, shall be submitted to: The Director Supervisory Data Center (SDC) Bangko Sentral ng Pilipinas 11th Floor, Multi-Storey Building BSP Complex, A. Mabini Street Malate, Manila 1004 Any exceptions received after the cut-off date or any exceptions not duly substantiated with documents before the cut-off date will be evaluated and considered in the computation of the ASF for the immediately succeeding year. 4. Withholding Tax on 2017 Supervisory Fees The following shall apply to Banks/NBQBs covered by Sections M and N of Bureau of Internal Revenue (BIR) Revenue Regulations (R.R.) No. 2-98, as amended by R.R. No. 17-2003, and R.R. No. 2-2006: 4.1 Within seven (7) days from date of this Memorandum, the concerned Bank/NBQB shall submit a written representation to BSP, (at the address indicated in Section 3 hereof), on whether or not it is included among the institutions covered under Sections M or N of R.R. No. 2-98, as amended. If available, a certified true copy of the BIR Notice classifying it under Section M of R.R. No. 2-98, as amended, shall be attached to the written representation. The submission of the written representation or BIR Notice shall no longer be necessary if previously transmitted and received by the BSP in connection with previous ASF assessments. 4.2 The ASF, net of the 2% CWT, shall be debited from their respective DDAs on the specified date referred to in the notice of ASF billing under Section 2 above. 4.3 Three (3) original signed copies of BIR Form No. 2307 Certificate of Creditable Tax Withheld at Source, which exclusively pertain to the withholding on ASF shall be submitted to the SDC at the address provided in Section 3 above on or before 30 July 2017. The BIR Form No. 2307 shall accurately indicate, among others, the following details: 4.3.1 Payee: Bangko Sentral ng Pilipinas 4.3.2 Tax Identification Number: 000-354-790-000 4.3.3 Address: A. Mabini St. corner P. Ocampo Sr. St., Malate, Manila 4.3.4 Zip Code: 1004 4.3.5 The BIR-registered name of the payor-bank/-NBQB, as exactly indicated in the BIR Certificate of Registration (BIR Form No. 2303) of the Bank/NBQB 4.3.6 The amount of income payment pertaining to the gross ASF 4.3.7 The tax withheld 4.3.8 The period of tax return Furthermore, the BIR Form No. 2307 Certificate of Creditable Tax Withheld at Source covering the withholding on ASF should not include other transactions with BSP and should pertain exclusively to the ASF. If the concerned Banks/NBQBs have other transactions with BSP, a separate BIR Form 2307 for the transaction/s shall be provided to BSP. 4.4 In case of failure of concerned Bank/NBQB to submit the duly accomplished forms within the deadline stated above or if such forms contain errors and discrepancies that would render the BIR Form No. 2307 invalid for claiming tax credits, the BSP shall be constrained to immediately debit an amount equivalent to the 2% CWT from the DDA of Banks/NBQBs concerned, with no obligation on the part of the BSP to reimburse said amount. In case of DDA deficiency, the provisions in Subsections X901.1 (2008-X608.1) and 4901Q.1 (2008-4652Q) of the MORB and MORNBFI, respectively, as amended, shall apply. This Memorandum shall take effect immediately. For strict compliance. TCAScE (SGD.) CHUCHI G. FONACIER Sector-in-Charge ANNEX A Scenarios for computation of 2017 Annual Supervisory Fee (ASF) 1. Upgrade from one bank category to another Scenario A: RB A upgraded to become TB A as of August 2016 The quarterly FRP of RB A will be combined with the monthly FRP of TB A and the TB rate will be applied. 2016 FRP Net Assessable Assets RB A TB A Jan Feb Mar 148,993,450.20 148,993,450.20 Apr May Jun 159,635,839.50 159,635,839.50 Jul Aug 170,278,228.80 170,278,228.80 Sep 168,700,764.00 168,700,764.00 Oct 168,186,770.40 168,186,770.40 Nov 177,710,888.80 177,710,888.80 Dec 192,866,280.80 192,866,280.80 Sum of Net Assessable Assets 1,186,372,222.50 No. of reporting periods 7 Average Assessable Assets 169,481,746.07 ASF rate for TB (1/28 of 1%) 0.000357143 ASF for 2017 for TB A 60,529.20 ============ 2. Downgrade from one bank category to another Scenario B: TB A downgraded to become RB A as of October 2016 The monthly FRP of TB A will be combined with the quarterly FRP of RB A and the RB rate will be applied. 2016 FRP Net Assessable Assets TB A RB A Jan 192,866,280.80 192,866,280.80 Feb 183,222,966.76 183,222,966.76 Mar 174,061,818.42 174,061,818.42 Apr 165,358,727.50 165,358,727.50 May 157,090,791.13 157,090,791.13 Jun 149,236,251.57 149,236,251.57 Jul 141,774,438.99 141,774,438.99 Aug 134,685,717.04 134,685,717.04 Sep 127,951,431.19 127,951,431.19 Oct Nov Dec 121,553,859.63 121,553,859.63 Sum of Net Assessable Assets 1,547,802,283.03 No. of reporting periods 10 Average Assessable Assets 154,780,228.30 ASF rate for RB (1/40 of 1%) 0.00025 ASF for 2017 for RB A 38,695.06 ============ 3. Consolidation: Two or more entities combine to form a new single entity. The original entities cease operations after the new entity started its operations. Scenario C: RB A and TB B consolidated in Jan 2017 to form a new TB C. The assessment of the 2017 ASF is on February 2017 Since the consolidation was prior to the assessment for 2017 ASF, the Net Assessable Assets of the two banks in 2016 will be combined and the TB rate will be applied 2016 FRP Net Assessable Assets RBA TB B TB C Jan 164,658,792.00 164,658,792.00 Feb 163,861,844.80 163,861,844.80 Mar 21,928,504.00 165,311,225.60 187,239,729.60 Apr 153,357,155.20 153,357,155.20 May 154,301,374.40 154,301,374.40 Jun 22,295,142.15 168,488,963.20 190,784,105.35 Jul 170,373,352.00 170,373,352.00 Aug 170,278,228.80 170,278,228.80 Sep 22,320,467.05 168,700,764.00 191,021,231.05 Oct 168,186,770.40 168,186,770.40 Nov 177,710,888.80 177,710,888.80 Dec 22,383,648.40 192,866,280.80 215,249,929.20 Sum of Net Assessable Assets 2,107,023,401.60 No. of reporting periods 12 Average Assessable Assets 175,585,283.47 ASF rate for TB (1/28 of 1%) 0.000357143 ASF for 2017 for TB C 62,709.03 ============ Scenario D: RB X and TB Y consolidated in November 2016 to form a new TB Z. The 2016 AAA of RB X as reported in its FRP for 3 quarters will be combined with the 2016 Net Assessable Assets of TB Y and the 2016 AAA of TB Z and the TB rate will be applied 2016 FRP Net Assessable Assets RB X TB Y TB Z Jan 174,949,966.50 174,949,966.50 Feb 174,103,210.10 174,103,210.10 Mar 20,638,592.00 175,643,177.20 196,281,769.20 Apr 162,941,977.40 162,941,977.40 May 163,945,210.30 163,945,210.30 Jun 20,983,663.20 179,019,523.40 200,003,186.60 Jul 181,021,686.50 181,021,686.50 Aug 180,920,618.10 180,920,618.10 Sep 21,007,498.40 179,244,561.75 200,252,060.15 Oct 178,698,443.55 178,698,443.55 Nov 199,705,941.95 Dec 219,676,536.15 Sum of Net Assessable Assets 2,232,500,606.50 No. of reporting periods 12 Average Assessable Assets 186,041,717.21 ASF rate for TB (1/28 of 1%) 0.000357143 ASF for 2017 for TB Z 66,443.47 ============ 4. Merger: One entity absorbs another entity and continue to operate as the surviving entity while the absorbed entity ceases to operate Scenario E: RB D and TB E merged in January 2017 with TB E as the surviving entity The 2016 AAA of RB D as reported in its FRP for 4 quarters will be combined with the 2016 Net Assessable Assets of TB E and the TB rate will be applied 2016 FRP Net Assessable Assets RB D TB E Total Jan 154,367,617.50 154,367,617.50 Feb 153,620,479.50 153,620,479.50 Mar 23,218,416.00 154,979,274.00 178,197,690.00 Apr 143,772,333.00 143,772,333.00 May 144,657,538.50 144,657,538.50 Jun 23,606,621.10 157,958,403.00 181,565,024.10 Jul 159,725,017.50 159,725,017.50 Aug 159,635,839.50 159,635,839.50 Sep 23,633,435.70 158,156,966.25 181,790,401.95 Oct 157,675,097.25 157,675,097.25 Nov 173,442,606.98 173,442,606.98 Dec 23,700,333.60 187,318,015.53 211,018,349.13 Sum of Net Assessable Assets 1,999,467,994.91 No. of reporting periods 12 Average Assessable Assets 166,622,332.91 ASF rate for TB (1/28 of 1%) 0.000357143 ASF for 2017 for TB E 59,507.98 ============ Scenario F: RB V and TB W merged in November 2016 with TB W as the surviving entity The 2016 AAA of RB V as reported in its FRP for 3 quarters will be combined with the 2016 Net Assessable Assets of TB W and the TB rate will be applied 2016 FRP Net Assessable Assets RB V TB W Total Jan 185,241,141.00 185,241,141.00 Feb 184,344,575.40 184,344,575.40 Mar 24,508,328.00 185,975,128.80 210,483,456.80 Apr 172,526,799.60 172,526,799.60 May 173,589,046.20 173,589,046.20 Jun 24,918,100.05 189,550,083.60 214,468,183.65 Jul 191,670,021.00 191,670,021.00 Aug 191,563,007.40 191,563,007.40 Sep 24,946,404.35 189,788,359.50 214,734,763.85 Oct 214,734,763.85 214,734,763.85 Nov 236,208,240.24 236,208,240.24 Dec 255,104,899.45 255,104,899.45 Sum of Net Assessable Assets 2,444,668,898.44 No. of reporting periods 12 Average Assessable Assets 203,722,408.20 ASF rate for TB (1/28 of 1%) 0.000357143 ASF for 2017 for TB W 72,758.00 ============ Note: In cases where the RB is the new or surviving entity, the rate for the RB will be applied in determining the 2017 ASF. 5. Amendment of reports used in the computation of ASF Scenario G: RB E amended its Dec. 2015 FRP in Jan. 2017 The 2016 ASF will be recomputed and the resulting under/(over) collection will be added to/(deducted) from the 2017 ASF Computation of 2017 ASF RB E 2016 FRP Net Assessable Assets Mar 19,864,644.80 Jun 20,196,775.83 Sep 20,219,717.21 Dec 20,276,952.08 Sum of Net Assessable Assets 80,558,089.92 No. of reporting periods 4 Average Assessable Assets 20,139,522.48 ASF rate for RB (1/40 of 1%) 0.00025 ASF for 2017 5,034.88 Under/(Over) Collection of 2016 ASF* 24.94 Total ASF for 2017 5,059.82 2% CWT 101.20 Net ASF for 2017 4,958.62 =========== * Recomputation of 2016 ASF RB E 2015 FRP Net Assessable Assets Original Amended Mar 18,522,548.05 18,522,548.05 Jun 19,605,793.15 19,605,793.15 Sep 20,644,771.95 20,644,771.95 Dec 21,484,407.05 21,883,458.27 Sum of Net Assessable Assets 80,257,520.20 80,656,571.42 No. of reporting periods 4 4 Average Assessable Assets 20,064,380.05 20,164,142.85 ASF rate for RB (1/40 of 1%) 0.00025 Recomputed ASF for 2016 5,041.04 Less: ASF collected for 2016: 4,915.78 : 2% CWT collected in 2016: 100.32 Under/(Over) Collection 24.94 ========= Footnotes 1. FRP for banks, CSOC for NBQBs, and FRPTI for banks and NBQBs with Trust functions.