Rules and Regulations to Implement the Provision Under Article X of RA 6734 on the Proportionate Share of the Autonomous Region in Muslim Mindanao (ARMM) in the National Collections from Businesses Operating in the Region

February 5, 1998 REVENUE REGULATIONS NO. 04-98 SUBJECT : Rules and Regulations to Implement the Provision Under Article X of RA 6734 on the Proportionate Share of the Autonomous Region in Muslim Mindanao (ARMM) in the National Collections from Businesses Operating in the Region TO : The Regional Treasurers, All BIR Collecting Officers, Branch Managers of Authorized Government Depository Banks (AGDBs) and Auditors of the COA in the ARMM and Others Concerned SECTION 1 . Purpose . Pursuant to the provision of Section 245 of the National Internal Revenue Code (NIRC) in relation to Section 3 of RA 6734, these regulations are hereby promulgated to implement the remittance of the proportionate share provided for under Section 5 of the said Act, to the provinces comprising the ARMM namely: Sulu, Tawi-Tawi, Lanao del Sur (except Marawi City) and Maguindanao (except Cotabato City). SECTION 2 . Policies . 1. Pursuant to paragraph 1 of ARMM Executive Order (EO) No. 3 dated March 5, 1992 as amended by EO No. 9 dated July 17, 1992, the BIR and other National Collecting Officers shall be responsible for the remittance of the 30% share of the province where the revenues were generated through the Provincial Treasurer and the 30% share of the Regional Government through the Regional Treasurer (RT) in the national collections of the ARMM. Likewise BIR and other BIR national collecting officers shall also be responsible for the remittance of the 40% NG share to the BTR thru the nearest AGDB Branch. 2. For the purpose of these regulations, internal revenue tax payments shall only be made thru Authorized Collection Agents (CA). Hence, the provisions of RR No. 5-84 and RR No. 4-97 relative to payment thru banks shall not apply. SECTION 3 . Definition of Terms . 1. National Collection refers to collections in the ARMM of internal revenue taxes, fees and charges and taxes imposed on natural resources. 2. ARMM share refers to the following: a) 30% share of the province or city; and b) 30% share of the Regional Government 3. National Government share refers to the 40% share of the national government in all the national collections in the ARMM. 4. Deposit slip refers to the form used in remitting the 40% National Government (NG) share and the 60% ARMM share in the national collections of the ARMM thru AGDB for credit to the account of the NG and the RT-ARMM respectively. 5. FE (Fiscal Examiner) refers to the representative of the Bureau of the Treasury (BTR) in the ARMM charged with the primary function of examining the books of accounts and other financial records of the collecting offices of BIR and other concerned agencies of the ARMM. SECTION 4 . Responsibilities . 1. The BIR Collection Agent in the ARMM shall: a. Open a suspense account "Due to the NG/ARMM" to account for check remittance. b. Remit his collections to the nearest AGDB branch in accordance with COA/DOF Joint Circular No. 1-81 dated January 1, 1981. c. Prepare the following in remitting his collections. c.1 For the 60% ARMM share: c.1.1 For cash remittance Prepare 6 copies of deposit slips for the 60% share to be credited to the account of the RT-ARMM, to be distributed as follows: Original - AGDB Branch Duplicate - Regional Treasurer Triplicate - FE Quadruplicate - BIR collection agent/other concerned NCO for submission to the concerned Chief, Finance Division, Revenue Region/ Chief Accountant Quintuplicate - BIR collection agent/other concerned NCO's file Sixtuplicate - BIR collection agent/other concerned NCO for submission to the BIR/ other concerned NCO Regional Auditor c.1.2 For check remittance Prepare 6 copies of deposit slips for distribution in the same manner as in c.1.1 for credit to the account due to RT-ARMM indicating therein the number of check, payee and the amount of check. The check shall be endorsed by the BIR Collection Agent on the reverse side of the check with the words "For deposit to the account of the Regional RT-ARMM". c.2 For the 40% National Government share: c.2.1 For Cash Remittance: Prepare 7 copies of deposit slips for the 40% share to be credited to the account of the NG/ARMM to be distributed as follows: Original - to be retained by the AGDB Branch for submission to BTR- Remittance Processing Division (RPD) thru Head Office AGDB Duplicate - to be retained by the AGDB Branch for its file Triplicate - to be retained by the AGDB Branch for submission to FE Quadruplicate - BIR collection agent/other concerned NCO for submission to the concerned Chief, Finance Division, Revenue Region/ Chief Accountant Quintuplicate - BIR collection agent/other concerned NCOs file Sixtuplicate - BIR collection agent/other concerned NCO for submission to Regional Treasurer-ARMM Septuplicate - BIR collection agent/other concerned NCO for submission to the BIR/ other concerned NCO Regional Auditor c.2.2 For check remittance: Prepare 7 copies of deposit slip for distribution in the same manner as in c.2.1 above for the 40% share to be credited to the account of NG/ARMM indicating therein the number of check, payee and the amount of check. The check shall be endorsed by the BIR collection agent/other NCO concerned on the reverse side of the check with the words "For deposit to the account of the NG/ARMM". d. Adjust his books in case of dishonored checks and collect the amount from the taxpayer/payor concerned. If cash is collected in payment of dishonored check, the amount shall be deposited with the AGDB branch in accordance with item no. c.1.1 for the 60% ARMM share and c.2.1 for the 40% NG share. If another check is issued to replace the dishonored check, the new check shall be deposited in accordance with c.1.2. for the ARMM share and c.2.2 for the NG share. 2. The Regional Treasurer ARMM and the Provincial Treasurer shall: a. Open an account with AGDB within the provinces comprising the ARMM b. Inform the BIR of the name of the AGDB branch where the ARMM opens an account 3. The AGDB Branch shall: a. Validate manually or with a validating machine, if available, the deposit slips by indicating therein the date, amount and validation number of the remittances. An Official Receipt shall be issued to the BIR Collection Agent for each set of deposit slip. b. Immediately (1) credit the cash remittance to the account of the Regional Treasurer-ARMM the sixty percent (60%) share of the ARMM and (2) transfer to the AGDB HO the forty percent (40%) share of the NG thru the Ticket Exchange Center (TEC). The AGDB Branch shall indicate in the TEC advice that the amount be credited to the demand deposit Account-ARMM of the BTR maintained in the AGDB HO. The AGDB branch shall furnish the FE a copy of the TEC advice and the Regional Treasurer-ARMM, a copy of the credit advice. c. Temporarily credit the check remittance to the suspense account. At the end of each week, the AGDB Branch shall transfer from the suspense account the amount equivalent to the cleared check (1) sixty percent (60%) for credit to the Regional Treasurer-ARMM and (2) forty percent (40%) for transfer to the AGDB HO for credit to the Demand Deposit Account-ARMM of the BTR. For every transfer, the AGDB Branch shall furnish the FE a copy of the TEC advice. The AGDB Branch shall also furnish the Regional Treasurer-ARMM a copy of the credit advice effecting credit to his account. d. Debit the suspense account in case of dishonored check and return the check to the BIR Collection Agent/other concerned NCO. Prepare debit advice in 5 copies to be distributed as follows: Original - BIR collection agent/other concerned NCO's file Duplicate - Regional Treasurer-ARMM Triplicate - FE Quadruplicate - BIR collection agent/other concerned NCO for Chief, Finance Division Revenue Region/Chief Accountant Quintuplicate - AGDB Branch e. Submit monthly bank statement (MBS) and monthly list of remittance (MLR) together with the Original RAs reflecting all cash remittances to be distributed as follows: Original - to be forwarded to BTr-RPD with the original RAs thru the AGDB Head Office (Accounting Department) Duplicate - to be forwarded to the AGDB Head Office for its file Triplicate - to be submitted to the FE concerned with the triplicate copies of RAs Quadruplicate - to be retained by the AGDB Branch concerned f. Submit statement of the account reflecting all transactions affecting the suspense account to the following: f.1. Regional Treasurer ARMM f.2. FE 4. The FE shall: a. Keep records of all RAs, deposit slips, credit advices, debit advices and TEC advices submitted by AGDB branch. b. Reconcile the monthly bank statement/statement of account, MLR and Deposit Slips received from the AGDB Branch with his records and the report of collections and remittances submitted by the BIR collection agent/other concerned NCO. c. Submit to the BTr-National Cash Accounting Division (NCAD) at the end of each month report of all remittances made by the BIR collection agent/other concerned NCO in the ARMM to the AGDB Branch for credit to the BTr account. d. Examine the books of accounts and other financial records of the BIR collection agent/other concerned NCO to determine the correctness of the share of NG in the collection in the ARMM and whether such share is actually remitted to BTr. e. Furnish the Regional Treasurer-ARMM copy of the Reports of Examinations. LLjur SECTION 5 . Repealing Clause . All existing rules and regulations inconsistent herewith are hereby revoked or modified accordingly. SECTION 6 . Effectivity . This order takes effect immediately. SALVADOR M. ENRIQUEZ, JR. Secretary Department of Finance Recommending Approval: LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue