Publishing Presidential Decree No. 2026, Restoring the Tax Privileges Granted to Rural Banks, and Amending for the Purpose Section 1 of Presidential Decree No. 1955

May 8, 1986 REVENUE MEMORANDUM CIRCULAR NO. 09-86 SUBJECT : Publishing Presidential Decree No. 2026, Restoring the Tax Privileges Granted to Rural Banks, and Amending for the Purpose Section 1 of Presidential Decree No. 1955 TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, published hereunder is the full text of Presidential Decree No. 2026. "PRESIDENTIAL DECREE NO. 2026 RESTORING THE TAX PRIVILEGES GRANTED TO RURAL BANKS, AND AMENDING FOR THE PURPOSE SECTION 1 OF PRESIDENTIAL DECREE NO. 1955 WHEREAS, rural banks play a vital role in the agricultural development program of the Government, as they serve the vast majority of the population in the rural areas; cd i WHEREAS, rural banks had earlier been granted tax privileges to strengthen and ensure their viability; WHEREAS, however, Presidential Decree No. 1955 withdrew the duty and tax privileges granted to private business enterprises and/or persons engaged in any economy activity, including rural banks; WHEREAS, the withdrawal of the tax exemption previously extended to rural banks, has adversely affected the profitability and viability of more than ninety percent (90%) of all rural banks operating throughout the country, especially in view of the prevailing economic conditions; WHEREAS, the restoration of the tax exemption of rural banks, will certainly help them weather the present economic crisis; WHEREAS, Parliamentary Bill No. 4531 introduced by MPs Emilio C. Macias II and Ricardo D. Abiera, was pending in the Batasang Pambansa, but was not passed before the Batasan's adjournment, for lack of material time; WHEREAS, considering the urgent representations of the rural bankers, and in order to ensure their survival in the face of the grave emergency caused by present economic difficulties, there is a need to act expeditiously to save the rural banking system from total collapse; NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested upon me by the Constitution, do hereby decree: cdt Sec. 1. Section of Presidential Decree No. 1955, is hereby amended by adding a new paragraph thereto, as follows: "(f) Rural banks whose net assets are less than thirty Million Pesos (P30,000,000); Provided , That the tax privileges shall be extended only for a period of five years from the date of the effectivity of this Decree, subject to further extension as may be recommended by the Minister of Finance." Sec. 2. All laws, orders, rules, regulations and issuances inconsistent with the provisions of this Decree, are hereby repealed, amended, or modified accordingly. Sec. 3. This Decree shall take effect immediately. Done in the City of Manila, this 3rd day of February, in the year of Our Lord nineteen hundred and eighty-six. (Sgd.) FERDINAND E. MARCOS President of the Philippines By the President: (Sgd.) JUAN C. TUVERA Presidential Executive Assistant Salient Features of Presidential Decree No. 2026 : 1. The Decree adds paragraph (f) to the enumeration of PD No. 1955 of the several tax exemptions and privileges not abolished by the aforesaid legislation, in effect restoring all tax exemptions and/or preferential tax treatment previously enjoyed by rural banks prior to their abolition on October 15, 1984 (date of effectivity of PD No. 1955) . cd 2. However, since PD No. 2026 took effect on 3 February 1986, it follows that restoration of the aforementioned tax exemptions and/or preferential tax privileges shall be effective only from and after the abovestated date. 3. The Decree furthermore makes it explicit that the tax exemption benefits therein restored shall apply only to rural banks whose net assets are less than P30,000,000 and that the same shall only be enjoyed for a period of five (5) years from date of effectivity thereof, subject to further extension as may be recommended by the Minister of Finance. All internal revenue officials, employees, and others concerned are hereby enjoined to give this Revenue Memorandum Circular the widest publicity possible. (SGD.) BIENVENIDO A. TAN Commissioner