Philippine Deposit Insurance Corporation (1)

May 13, 2020 FIRB RESOLUTION NO. 005-20 SUBJECT MATTER : Philippine Deposit Insurance Corporation (1) WHEREAS, the Philippine Deposit Insurance Corporation (PDIC) is a government instrumentality primarily mandated to provide a deposit insurance system for the depositing public to help promote public confidence and economic stability; WHEREAS, the PDIC, as a regulatory agency, exercises governmental functions with the responsibility to provide safeguards against risks of bank failures; WHEREAS, in strengthening the deposit insurance system, the State declared it as a policy to preserve and maintain at all times the Deposit Insurance Fund (DIF) of the PDIC; WHEREAS, Republic Act (RA) No. 9576 provides that all tax obligations of the PDIC shall be chargeable to the tax expenditure fund (TEF) in the annual General Appropriations Act (GAA) for a period of five (5) years reckoned from the date of effectivity of the Act on June 1, 2009 and on the 6th year and thereafter, the PDIC shall be exempt from income tax, final withholding tax, value-added tax (VAT) on assessments collected from member banks and local taxes; WHEREAS, Section 86 of RA No. 10963 (Tax Reform for Acceleration and Inclusion [TRAIN] Act, dated December 19, 2017) provides for the repeal of VAT exemption of various government-owned and/or -controlled corporations (GOCCs) including those of the PDIC, state universities and colleges (SUCs), and other government instrumentalities (GIs); WHEREAS, under the same law, the repealed VAT exemption of the concerned GOCCs, SUCs and other GIs is replaced by a targeted tax subsidy being administered by the Fiscal Incentives Review Board (FIRB); WHEREAS, Section 15 (c) of RA 11465 or the 2020 General Appropriations Act (GAA) reiterates the authority of the Fiscal Incentives Review Board (FIRB) to grant tax subsidies; SaCIDT WHEREAS, the cash payment of the VAT will be charged against the Deposit Insurance Fund (DIF) and could adversely impact on the PDIC's ability to maintain the required DIF level and can be prejudicial to its dividend remittances to the National Government; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to grant tax subsidy to the PDIC in the amount of THREE BILLION THREE HUNDRED MILLION PESOS (PhP3,300,000,000.00) only , for VAT obligations for the calendar year 2020. Provided , that: (a) the initial issuance of the corresponding Certificate of Entitlement to Subsidy (CES) shall be limited to the amount of ONE BILLION FIVE HUNDRED NINETY-SEVEN MILLION TWO HUNDRED SEVENTY-SIX THOUSAND EIGHT HUNDRED FIFTY-ONE AND 33/100 (P1,597,276,851.33) only , representing VAT with actual Bureau of Internal Revenue (BIR) billings/assessments/tax returns for the month of January 2020; and (b) the subsequent CES shall be issued upon the submission by the PDIC to the FIRB of its actual tax liability based on BIR billings/assessments/tax returns: Provided, further , that such availment shall be in accordance with the terms and conditions of Section 15 (c) of RA No. 11465 or the 2020 GAA, subject to the availability of funds therefor, pursuant to the terms and conditions of the Rules and Regulations to Implement the Subsidy Provision under Executive Order (EO) No. 93. (SGD.) LAURA B. PASCUA Undersecretary Department of Budget and Management (SGD.) CEFERINO S. RODOLFO Undersecretary Department of Trade and Industry (SGD.) ROSEMARIE G. EDILLON Undersecretary National Economic and Development Authority (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Bureau of Internal Revenue (SGD.) REY LEONARDO B. GUERRERO Commissioner Bureau of Customs (SGD.) MARLENE LUCERO-CALUBAG OIC-Executive Director National Tax Research Center Head, FIRB Secretariat (SGD.) ANTONETTE C. TIONKO Undersecretary of Finance Presiding Officer-FIRB