Prescribing the Policies and Procedures for Processing and Monitoring of Commercial and Universal Banks' Own Tax Liabilities

October 27, 1998 REVENUE MEMORANDUM ORDER NO. 04-99 TO : All Revenue Officials and Employees and Others Concerned SUBJECT : Prescribing the Policies and Procedures for Processing and Monitoring of Commercial and Universal Banks' Own Tax Liabilities I. Objectives This order is issued to: A. Simplify and strengthen the monitoring of commercial and universal banks' (hereafter referred to as "BANKS") own tax liabilities; and B. Set policies and establish procedures for the processing and monitoring of the BANKS' own tax liabilities. II. Policies A. All types of taxes due from BANKS shall be paid through Electronic Fund Transfer Instruction System (EFTIS), except for Capital Gains Tax and the corresponding documentary stamp tax. B. All tax returns shall be filed at the Large Taxpayers Division (LTD), Bureau of Internal Revenue (BIR), National Office, except for Capital Gains Tax Returns and the corresponding Documentary Stamp Tax Returns. C. The BANKS shall provide the information requirements of the BIR through the Information Systems Operations Service (ISOS) Data Center and the Bangko Sentral ng Pilipinas (BSP). D. The Revenue District Office (RDO) having jurisdiction over the bank Head Office (HO) can have access to its data thru the respective Revenue Data Center (RDC). III. Procedures A. The BANKS shall: 1. Enroll in the EFTIS of the BSP; 2. Pay their own tax liabilities through EFTIS following the procedures enumerated herein, except for capital gains tax and its corresponding documentary stamp tax which shall be paid in accordance with Revenue Regulations No. 8-98: a. Access EFTIS through a designated processor and input the transaction via the CREATE menu option. Field Name Description a.1. Bank Reference No. As defined by EFTIS a.2. Transaction Code 109 for Banks' payment of its own tax liabilities a.3. Value Date Payment Date a.4. Collection Date Not applicable a.5. Amount Total amount of own tax liabilities a.6. Comments If there is a single tax return form, indicate form type. If there are more than one return, indicate the various return forms and the corresponding amount for each form. b. After review of transactions inputted, save records. c. Transactions will pass through two (2) Bank Approving Officers who will review the transactions awaiting approval via the APPROVE menu option of the EFTI system. If everything is in order, approve the pending transactions. llcd d. Bank Personnel in-charge of transmission will transmit the transactions to BSP via the SEND menu option. Banks' cut-off time for transmission is 2 PM daily. Afterwards, click on the REPLICATE icon to finally transmit the mail database to the BSP server. 3. Submit reports on BANKS' own tax payments as follows: For BSP: a. At end of day, the BANK will generate a BSPFTI Registry which is to be duly signed by the authorized signatories of the BANK; b. Fax the BSPFTI Registry daily to the Deposit Liabilities and Reconciliation Division (DLRD) not later than 9:00 AM of the following banking day after transmission date; and c. Forward hard copies of the BSPFTI Registry to BSP on a weekly basis, i.e., every Monday of the following week covering Monday to Friday transactions of the previous week. For BIR Revenue Accounting Division (RAD) and Bureau of the Treasury (BTR): a. Deliver a copy of BSPFTI Registry to BIR-RAD and BTR the following banking day after transaction date. 4. File in triplicate their tax returns at the LTD-Collection Service on or before the deadline set in the payment of their own tax liabilities that have become or are to be due; 5. Attach to their corresponding consolidated tax return, hard copies of the summary of tax liabilities of each of their branches as shown in Annex A; 6. File a Registration Update Form (BIR Form 1905) for branches registered at a Revenue District Office (RDO) other than where their Head Office (H.O.) is located to exclude tax types no longer to be paid at the Authorized Agents Banks (AABs) within the jurisdiction of said RDO as a result of this RMO; 7. File capital gains tax and the related documentary stamp tax returns at the authorized agent banks within the jurisdiction of the Revenue District Office where the property is located using the Taxpayer Identification Number (T.I.N.) of the Head Office (H.O.); and 8. Transmit electronically or through other media, other data requirements of the BIR (which are to be advised and discussed later) to the LTD-Collection Service through the ISOS Data Center. cdll B. The Bangko Sentral ng Pilipinas (BSP) shall: 1. Receive electronically transmitted participating BANKS' own tax payments & credit to BTR's account. 2. Check amount of participating BANKS' own tax payments against their available balance in the demand deposit account ledger maintained by BSP. 3. If within balance, post debits so that an updated Demand Deposit Account (DDA) balance for each day's transactions will be available by 4:00 PM on the same day. 4. Furnish the BIR through electronic mail with the participating BANKS' own tax payment data, that have been cleared and debited against their available balance in the demand deposit account ledger by BSP, for reconciliation purposes. C. The LTD-Collection Service (CS) shall: 1. Receive hard copies of tax returns as well as attachments for the summary of tax liabilities of each of the branches of the BANKS; 2. Encode data based on the tax return's triplicate copy for management information system (MIS) purposes using the Excel Template provided by Information Systems Development Service (ISDS); 3. Forward to ISOS-DC and RDO their corresponding copies of tax returns as well as attachments, to be distributed as follows: Original - ISOS-DC Triplicate - RDO 4. Receive from ISOS-DC through electronic mail, data on BANKS' tax payments transmitted by BANKS to BSP through EFTIS; 5. Compare, analyze and reconcile tax payment data received from the BSP and ISOS-DC with LTD-MIS collection report; 6. Inform concerned BANKS of an error of the tax due based on the face of the return as against the debit advise for the tax payment with the BSP through EFTIS, within ten (10) banking days from the date of discovery of such an error (the concerned BANKS shall still be liable for the payment of the surcharge and interest on the balance of the tax due as a result of the error); 7. Monitor compliance of BANKS in the payment of their own tax liabilities; 8. Prepare monthly tax collection report, by type of tax as well as compliance reports to the Deputy Commissioner (DCIR) for Operations, copy furnished Assistant Commissioner (ACIR), Collection Service; and 9. Furnish a copy of the collection report to the non-computerized RDO having jurisdiction over the bank HO for inclusion of the pertinent collection data in their 12.09 report and for reconciliation purposes. D. The Information Systems Operations Service (ISOS) Data Center (DC) shall: 1. Receive payment data of BANKS from the BSP through electronic mail; 2. Encode payment data from the original copy of the tax return utilizing the Limited Bank Data Entry System (LBDES); 3. Generate and submit LBDES reports to LTD-CS every 10 th day following the end of the preceding month; and 4. Forward original copy of the tax return to the respective RDC for regular Integrated Tax System (ITS) processing and safekeeping. E. The Information Systems Development Service (ISDS) shall: 1. Provide LTD-CS with the MS EXCEL template for the data capture of needed information from the tax returns; and 2. Install, maintain and enhance programs in the analysis of data on BANKS as required by top management. F. The DCIR, Operations Group shall: 1. Evaluate reports submitted by the Collection Service; 2. Initiate appropriate action based on findings from the reports; and 3. Submit regular reports to the Commissioner. V. Repealing Clause All other issuances and/or portions thereof inconsistent herewith are hereby repealed and amended accordingly. VI. Effectivity This Order takes effect immediately. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue