Taxation of Certain Income Derived from Banking Activities

November 7, 1980 REVENUE REGULATIONS NO. 12-80 SUBJECT : Taxation of Certain Income Derived from Banking Activities TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope . Pursuant to the provisions of Sec. 16 of P.D. No. 1739, and Section 326 in relation to Section 4 of the National Internal Revenue Code as amended, these regulation are hereby promulgated to govern the manner of taxation of certain income derived from banking activities as provided for by Presidential Decree No. 1739. SECTION 2. Definitions of terms . For the purpose of these regulations, unless the context otherwise indicates, the following definitions of terms are hereby adopted: (a) " Bank " shall mean every banking institution as defined in Section 2 of the General Banking Act, Republic Act No, 337, as amended. A bank may either be a commercial bank, a thrift bank, a rural bank or a specialized government bank. (b) " Non-bank financial intermediary " shall mean every financial intermediary as defined in Section 2-D(c) of the General Banking Act, Republic Act No. 337, as amended, authorized by the Central Bank of the Philippines to perform quasi-banking functions. (c) " Quasi-banking functions" shall mean borrowing funds, for the borrower's own account, through the issuance, endorsement or acceptance of debt instruments of any kind other than deposits, or through the issuance of participations, certificates of assignment, or similar instruments with recourse, trust certificates or of repurchase agreements, from twenty or more lenders at any one time, for purposes of relending or purchasing receivables and other similar obligations: Provided, however , that commercial, industrial and other non-financial companies which borrow funds through any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers, shall not be considered as performing quasi-banking functions. (d) " Finance companies " shall mean corporation or partnerships other than a bank or an insurance company, primarily organized for the purposes of extending credit facilities to consumers and to industrial, commercial or agricultural enterprises whether by granting direct loans or by discounting or factoring commercial papers or accounts receivables for profit, buying and selling contracts, leases, chattel mortgages and other evidences of indebtedness arising out of one or more of the steps in the distributions and sale of commodities. (e) " Savings deposit " is a deposit which may be withdrawn by the depositor at any time, subject only to the right of the depository bank to require reasonable prior notice in writing before withdrawal may be made. (f) " Time deposit " is a deposit which has a definite time of maturity and cannot be withdrawn by the depositor until maturity except in cases of authorized pretermination. aisa dc " Deposit substitutes " shall mean an alternative form of obtaining funds from the public, other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrower's own account, for purposes of relending or purchasing of receivables and other obligations. These instruments may include, but need not be limited to, promissory notes, repurchase agreements, certificates of assignment or participation, and similar instruments with recourse as may be authorized by the Central Bank of the Philippines for banks and non-bank financial intermediaries: Provided, however , that debt instruments issued for interbank loans, including those between or among quasi-banks shall not be considered as deposit substitute debt instruments. (h) " Interest " with respect to bank deposits, shall mean the amount which a depository bank may pay on savings and time deposit in accordance with rates authorized by the Central Bank of the Philippines. " Yield " shall mean the difference between the amount the lender/investor loaned/placed and the amount he received upon maturity of the deposit substitute/debt instruments which shall in no case be lower than the interest rate prevailing at the time of the issuance or renewal of the said debt instruments. Yield shall be synonymous with the interest rate of return earned by a debt security held to maturity. (j) " Dealer in securities" includes all persons, natural or juridical, duly licensed by the Securities and Exchange Commission to engage, for their own account, in the sale of stock, bonds, exchange, bullion, coined money, bank notes, promissory notes, or other securities. Notwithstanding the foregoing, nothing in these regulations shall preclude the Commissioner of Internal Revenue from treating other taxpayers engaged in similar activities but not licensed by the Securities and Exchange Commission as dealers in securities . cd i (k) " Lending investor " includes all persons who make a practice of lending money for themselves or others at interest. SECTION 3. Imposition of Tax . The following taxes on income shall be imposed: (a) Final withholding income tax on (1) Interest on savings deposit . In general, the rate of final withholding tax to be imposed on savings deposit maintained with authorized agent bank shall be fifteen (15%) per cent based on adjusted gross interest paid or accrued. However, where the recipient/depositor is enjoying preferential income tax treatment under existing laws, the withholding tax rate to be applied shall be the tax rate applicable to said class of taxpayers or to such type of income as shown in the certificate of preferential tax treatment issued by the Commissioner of Internal Revenue. The withholding tax herein imposed shall not apply to (i) interest on deposits in foreign currency under the Foreign Currency Deposit Law (R.A. 6426), the Offshore Banking Act (PD No. 1034) or the Expanded Currency Deposit Law (PD No. 1035). (ii) interest paid on deposits maintained by tax-exempt entities as certified by the Commissioner of Internal Revenue. (iii) interest paid on all deposit accounts maintained by an individual depositor alone or together with another in any one bank not exceeding eight hundred pesos (P800) per calendar year or two hundred pesos (P200.00) per quarter thereof. However, in case where the interest earnings of an individual depositor alone or together with another for all types of deposits held in a bank, exceed P800.00 per calendar year or P200.00 per quarter thereof, the entire amount of interest earning shall be subject to withholding tax. (2) Interest on time deposit or yield on deposit substitute . In general, the rate of final withholding tax to be imposed on interest on time deposits by authorized agent banks and on yield on deposit substitutes by authorized agent banks and non-bank financial intermediaries shall be twenty per centum (20%). However, where the depositor/investor is enjoying preferential tax treatment under existing laws, the withholding tax rate to be applied shall be the tax rate applicable to said class of taxpayer or to such type of income as shown in the certificate of preferential tax treatment issued by the Commissioner of Internal Revenue. acd The withholding tax herein imposed shall not apply to (i) interest on time deposits in foreign currency under the Foreign Currency Deposit Law (R.A. 6426), the Offshore Banking Act (P.D. 1034) or the Expanded Currency Deposit Law (P.D. 1035). (ii) interest on time deposit and yield on deposit substitute owned by tax-exempt entities as certified by the Commissioner of Internal Revenue. (iii) interest paid on all deposit accounts maintained by an individual depositor alone or together with another in any one bank not exceeding eight hundred pesos (P800.00) per calendar year or two hundred pesos (P200.00) per quarter thereof. However, in cases where the interest earning of an individual depositor alone or together with another for all types of deposits held in a bank exceeds P800.00 per calendar year or P200.00 per quarter thereof, the entire amount of interest earning shall be subject to withholding tax. (iv) interest on borrowing from World Bank, Asian Development Bank, International Finance Corporation and similar institutions. Interest or yield income from instruments evidencing indebtedness, other than deposit or deposit substitute, issued, endorsed, sold transferred or conveyed in any other manner by any person or entity, including financial intermediaries, shall now be subject to the provisions of appropriate income tax laws and regulations. (b) Percentage tax On dealer in securities and on lending investors There shall be imposed on the gross income realized by dealers in securities or lending investors as such a percentage tax of five per centum (5%). (c) Gross receipts tax (1) On banks and non-bank financial intermediaries . The rates of taxes to be imposed on gross receipts derived by banks and non-bank financial intermediaries are as follows: Kinds of income Rates (a) On interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which such receipts are derived (i) Short-term maturity - not in excess of two (2) years 5% (ii) Medium-term maturity - over two (2) years but not exceeding four (4) years 3% (iii) Long-term maturity - over four (4) years but not exceeding seven (7) years 1% (iv) Exceeding seven (7) years 0% (b) On dividends 0% (c) On royalties, rentals of property, real or personal, profit from exchange and all other items treated as gross income under the Tax Code 5% (2) On finance companies as well as on other financial intermediaries not performing quasi-banking activities . The rates of taxes to be imposed on gross receipts derived by finance companies or other financial intermediaries not performing quasi-banking activities are as follows: Kinds of income Rates (a) on interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which such receipts are derived (i) Short-term maturity - not in excess of two (2) years 5% (ii) Medium - term maturity over two (2) years but not exceeding four (4) years 3% (iii) Long term maturity over four (4) years but not exceeding seven (7) years 1% (iv) Exceeding seven (7) years 0% (b) On dividends, royalties, rentals of property, real or personal, profit from exchange and all other items treated as gross income under the Tax Code 5% SECTION 4. Manner of Computation of Tax Base . For purposes of Section 3 above, tax bases of the following taxes shall be computed in the following manner: (a) Final withholding tax on savings deposits . The final withholding tax on savings deposits shall be based on the adjusted gross interest paid or accrued by authorizing agent banks on all savings deposits as computed in the manner described below . The adjusted gross interest paid or accrued is arrived at after deducting from the total interest on savings deposits paid or accrued, the sum of (1) All interests paid or accrued on all savings deposit maintained in foreign currency; (2) All interests paid or accrued on all savings deposits maintained by tax-exempt entities; and (3) All interest paid or accrued on all savings deposits maintained by an individual depositor alone or together with another in any one bank at any time not exceeding eight hundred pesos (P800.00) per calendar year or two hundred pesos (P200.00) per quarter thereof. The adjusted gross interest paid or accrued on savings deposit shall further be detailed by authorized agent banks as to amount subjected in full to the fifteen per centum (15%) final withholding tax and amount subjected to preferential final withholding tax rates in the prescribed form (B.I.R. Form No. _____.) casia (b) Final withholding tax on time deposits The final withholding tax on time deposits shall be based on the adjusted gross interest paid or accrued by authorized agent banks on all time deposits as computed in the manner described below . The adjusted gross interest paid or accrued is arrived at after deducting from the total interest on time deposits paid or accrued, the sum of (1) all interest paid or accrued on time deposits maintained in foreign currency; (2) all interest paid or accrued on time deposits maintained by tax-exempt entities; and (3) all interest paid or accrued on all time deposit accounts maintained by an individual depositor alone or together with another in any one bank at any time not exceeding Eight Hundred (P800.00) Pesos per calendar year or Two Hundred (P200.00) Pesos per quarter thereof. The adjusted gross interest paid or accrued on time deposit shall further be detailed by authorized agent banks as to the amount subjected in full to the twenty per centum (20%) final withholding tax and amount subject to preferential final withholding tax rates in the prescribed form (B.I.R. Form No. _____). (c) Final withholding tax on yield of deposit substitutes .- The final withholding tax on yield of deposit substitute shall be based on the adjusted gross interest or yield paid or accrued by banks or non-bank financial intermediaries on all of its deposit substitute debt instruments issued. The adjusted gross interest or yield paid or accrued is arrived at after deducting from the total interest or yield paid or accrued on deposit substitutes, the sum of (1) All interest and/or yield paid or accrued on deposit substitute earned by tax-exempt entities; (2) All interest and/or yield paid or accrued on inter-bank loans, including those between or among quasi-banks; (3) All interest and/or yield paid or accrued on borrowings from World Bank, Asian Development Bank, International Finance Corporation and similar institutions; and (4) All interest and/or yield paid or accrued on deposit substitutes exempt from withholding tax. The adjusted gross interest and/or yield paid or accrued on deposit substitute debt instruments shall further be detailed as to amount subjected in full to the twenty per centum (20%) final withholding tax and amount subjected to preferential final withholding tax rates in the prescribed from (B.I.R. Form No. _____). (d) Percentage tax on dealers in securities or lending investors . The percentage tax shall be based on gross income, derived by dealers in securities or lending investors whether actually received or not. (e) Gross receipts tax on banks, non-bank financial intermediaries, financing companies, and other non-bank financial intermediaries not performing quasi-banking activities . The rates of taxes to be imposed on the gross receipts of such financial institutions shall be based on all items of income actually received. Mere accrual shall not be considered, but once payment is received on such accrual or in cases of prepayment, then the amount actually received shall be included in the tax base of such financial institutions, as provided hereunder: (1) Interest and other charges imposed on short-term maturity shall be subject to the normal gross receipts tax rate of five per centum (5%). (2) In the case of interest income on medium-term and long-term lending activities, the rate of the gross receipts tax that may be imposed shall be determined in accordance with the remaining maturity which shall be reckoned from installment period during the year (present period) up to maturity of the debt instrument. Example: If a loan agreement was signed by Bank A with Corporation B on January 2, 1974 payable in ten (10) equal annual installments with the last installment payable on January 2, 1984, then the loan agreement as of January 2, 1980 (present period) has a remaining maturity of four (4) years. (3) Payments received corresponding to installment due for the present period shall always be deemed as the last installment due on the loan agreement. Thus, in the example above, the installment received, in case payment is actually made on January 2, 1980, shall be considered as a transaction of a debt instrument with a remaining maturity of four (4) years in which case the rate of gross receipts tax to be imposed on any income derived therefrom shall be the rate of three per centum (3%) (over two years but not exceeding four years category of transaction). (4) Commissions and other fees as a general rule shall be taxed in the year actually received. However, if the loan agreement or financial leasing is considered as of medium to long-term maturity or if such loan agreement is discounted, then the corresponding commission and other fees and charges of such income arising from discounting may be taxed on the basis of the remaining life of the debt instrument. (5) For purposes of classifying loan agreement/debt instrument as to its proper category of transactions, i.e., short-term, medium-term and long-term, the term of the instrument reckoned from date of issue to its maturity shall be considered, and banks and non-bank financial intermediaries are hereby required to stamp across the face of the debt instrument the words. "This debt instrument is a term debt instrument subject to the preferential gross receipts tax rates on all copies of the said instrument." SECTION 5 . Pretermination . In case of pretermination, the maturity period shall be reckoned to end as of the date of pretermination for purposes of classifying the transaction as short, medium or long-term and applying the correct rate of tax. Any additional tax that may arise as a consequence of the reclassification of the transaction shall be considered as a deficiency tax subject to deficiency penalties prescribed in Section 13 of these regulations. Illustrations: Mr. A executed on November 10, 1980 a long-term loan from Bank B in the amount of P5,000.000 payable within ten (10) years with the first installment payable on or before November 10, 1981 and the succeeding installment on the same date thereafter. Assume that on November 10, 1985, the loan was preterminated and that the interest paid and other fees received from year 1980 up to 1985, amounting to P100,000 annually, were received and declared by Bank B correctly and the applicable gross receipts taxes were paid as follows: acd Year Remaining Amount of Applicable Gross receipt tax maturity interest, etc. tax rate 1981 9 P100,000 Exempt 1982 8 100,000 Exempt 1983 7 100,000 1% P1,000 1984 6 100,000 1% 1,000 1984 5 100,000 1% 1,000 Total Gross Receipts Tax P3,000 Applying the above, rule, the loan agreement shall be reclassified from a long-term exempt category of transaction (over seven years) to a medium-term loan (over four years but not exceeding seven years category of transaction) and the correct gross receipt tax, including prior years, shall be recomputed on the basis of the new category as shown hereunder: Year Remaining Amount of Applicable Gross receipt tax maturity interest, etc. tax rate 1981 4 P100,000 1% P3,000 1982 3 100,000 3% 3,000 1983 2 100,000 3% 3,000 1984 1 100,000 5% 5,000 1985 Less than 100,000 5% 5,000 1 year Total Gross Receipts Tax 19,000 Less: Gross Receipts Tax Previously paid 3,000 Deficiency Gross Receipts Tax 16,000 Add: 25 % surcharge 4,000 Interest from to Amount Still Due and Payable P20,000 ====== SECTION 6. Manner of Filing Return and Payment of Taxes . The taxes herein imposed shall be paid upon filing a return, in duplicate, with the Revenue District Officer or the Collection Agent of the city or duly authorized treasurer of the municipality where the taxpayer's principal office is located and where its books of accounts are kept except in cases where the Commissioner of Internal Revenue allows. The required return shall be filed in the case of - (a) Quarterly (1) Return of final withholding tax on interest on deposits and/or deposit substitutes Within twenty-five (25) days after the end of each quarter of any calendar year. (2) Return of percentage tax as dealers in securities and lending investors and gross receipts tax . Within twenty (20) days after the end of each calendar or fiscal quarter as the case may be, a quarterly declaration on a cumulative basis of the amount of its receipts of any earnings shall be filed. (b) Annually Final annual percentage tax return On or before the 20th day of February following the close of the taxable year, every person liable to tax under this Section shall file a final percentage tax return covering the total receipts or earnings for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made is not equal to the total tax due on the entire gross receipts or earnings for that year, the taxpayer shall either pay the tax still due or the excess tax shall be allowed as tax credit against the quarterly percentage tax liabilities for the taxable quarters of the succeeding taxable year. cdt SECTION 7. Nature and Treatment of Taxes Imposed under these Regulations . (a) All withholding taxes deducted and withheld by the withholding agent in accordance with these regulations shall be held as a special fund in trust for the government until paid to the collecting officer. (b) In addition, all withholding taxes deducted and withheld by the withholding agent in accordance with these regulations shall be considered as a final tax which shall, in no case, be allowed as a deduction or credit against income or any other taxes. (c) All percentage taxes and tax on gross receipts paid or accrued in accordance with these regulations shall be allowed as a deduction in computing the taxpayer's income tax liability. SECTION 8. Nature and Treatment of Interest on Deposits and Yield on Deposit Substitutes . (a) The interest earned on Philippine Currency, bank deposits and yield from deposit substitutes subjected to the withholding taxes in accordance with these regulations need not be included in the gross income in computing the depositor's/investor's income tax liability in accordance with the provision of Section 29(b), (c) and (d) of the Tax Code. (b) Only interest paid or accrued on bank deposits, or yield from deposit substitute declared for purposes of imposing the withholding taxes in accordance with these regulations shall be allowed as interest expense deductible for purposes of computing taxable net income of the payor. (c) If the recipient of the above-mentioned items of income are financial institutions, the same shall be included as part of the tax base upon which the gross receipt tax is imposed. cdt SECTION 9 . Procedures in Requesting for Exemption from Withholding Tax and/or Tax Credit Refund . (a) In order that no withholding tax may be imposed on savings or time deposits or deposit substitutes maintained by a tax-exempt entity or in order that the reduced preferential tax rate shall be the rate of withholding tax to be used by the withholding agent, such entity must file an application, duly accompanied by its proof of exemption or enjoyment of a preferential income tax treatment with the Commissioner of Internal Revenue. On the basis of such application, the Commissioner or his authorized representative shall prepare a certification of exemption or enjoyment of a preferential withholding tax rate, as the case may be, which certificate shall be the only basis for any authorized bank either not to impose or impose a rate of withholding tax. Where, notwithstanding the foregoing, tax has been withheld from interest on deposit accounts maintained by a tax-exempt entity, or in the case of an entity enjoying preferential income tax treatment, the withholding tax rate applied is more than the applicable rate pertaining to said class of taxpayer or to such type of income, or tax has been withheld on a deposit account maintained by a depositor alone or together with another in one bank, the interest income on which does not exceed eight hundred pesos (P800.00) a year, then the total or the excess withholding tax so withheld shall be refunded or credited, as the case may be, upon filing of a request for refund, together with proof of tax exemption or enjoyment of a preferential income tax treatment and a certification issued by the bank concerned as to the amount of tax withheld. Thereafter, such request shall be processed by the Bureau as a refundable case. SECTION 10 . Exemption of Banks and Non-bank Financial Intermediaries . Banks, non-bank financial intermediaries, and corporations organized primarily and authorized by the Central Bank of the Philippines to hold shares of stock of banks shall be exempt from the imposition of the twenty-five per centum (25%) surtax on unreasonable accumulation of surplus and on the forty-five per centum (45%) surtax imposed on personal holding companies. The additional five (5%) per cent development tax imposed on corporations pursuant to the provisions of Section 24(3) shall only be imposed on banks and non-bank financial intermediaries if more than twenty (20%) per cent of all classes of stock entitled to vote on such corporation is held by: i) persons related to each other within the third degree of consanguinity or affinity, or (ii) a corporation the majority of the shares of which are owned by such related persons, or (iii) two or more corporations the majority of the shares of which are owned by the same person or so related persons. aisa dc SECTION 11 . Statement to be Attached to the Corporate Tax Return of Financial Institutions . There shall be attached to the final consolidated corporate return of the authorized agent bank or non-bank financial intermediaries for each taxable year, a statement setting forth in summarized form the pertinent information required by these regulations with respect to the computation of the aggregate interests paid on savings, time deposits and deposit substitutes and taxes withheld therefrom and paid to the Bureau, during the year (B.I.R. Form No. ______ ). SECTION 12 . Records to be Kept . Every taxpayer required to file a return pursuant to these regulations shall maintain records as well as all the supporting data used in preparing the returns required to be filed which must be made readily available at its principal place of business. For purposes of facilitating verification of the preferential Gross Receipt Tax, separate subsidiary records showing all those loan agreement/debt instrument classified as to its proper category of transactions, in accordance with Section 4(3) (5) hereof, shall be maintained by banks and non-bank financial intermediaries. SECTION 13 . Penalties . (a) In cases of withholding taxes . In addition to civil and criminal penalties for violations of the Income Tax Laws as provided for under Sections 73, 74 and 337 of the Tax Code of 1977, the following administrative penalties incident to delinquency or deficiency prescribed in Sections 51 and 72 of the Tax Code of 1977 shall be imposed. These penalties shall be collected at the same time, in the same manner and as part of the tax. (1) Surcharges . In case of any failure to make and file a return within the time prescribed by law, not due to willful neglect, there shall be added to the tax twenty-five (25%) per centum of its amount, except that when a return is voluntarily and without notice from the Commissioner or any other revenue officer filed after such time, and it is shown that the failure to file it was due to a reasonable cause no such addition shall be made to the tax. In case of failure to make and file a return due to willful neglect or in case a fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge of fifty (50%) per centum of the amount of such tax on deficiency tax. (2) Interest on deficiency tax . Where a deficiency tax is determined to exist, there shall be collected as part of the tax, deficiency interest at the rate of twenty (20%) per centum per annum from the date prescribed for the payment of the tax to the date the deficiency is assessed: Provided , That the maximum amount of interest that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period of three (3) years. (3) Additions to tax in case of non-payment . (i) Tax shown on the return . Where the amount determined by the withholding agent as the withholding tax is not paid on or before the date prescribed for its payment to the Bureau of Internal Revenue, there shall be collected as part of the tax, interest upon such unpaid amount at the rate of twenty (20%) per centum per annum from the date prescribed for its payments until it is paid: Provided , That the amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period of three (3) years. (ii) Deficiency . Where a deficiency, or any interest assessed in connection therewith, or any addition to the withholding tax provided herein is not paid in full within thirty (30) days from the date of notice and demand from the Commissioner of Internal Revenue, there shall be collected upon the unpaid amount, as part of the tax, interest at the rate of notice and demand until it is paid; Provided , That the maximum amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period of three years. acd (iii) Surcharge . If any amount of the withholding tax assessed is not paid in full within thirty days after notice and demand there shall be collected in addition to the interest prescribed herein and in subparagraph (ii) above and as part of the tax a surcharge of ten (10%) per centum of the amount of tax unpaid. (b) In cases of percentage tax and tax on gross receipts . (1) Failure to file and pay the tax . If the required return is filed with a person other than those mentioned in Section 6 hereof or if the percentage tax on any business is not paid within the time specified by law, the amount of the tax shall be increased by twenty-five (25%) per centum , the increment to be a part of the tax and the entire unpaid amount shall be subject to the interest at the rate of twenty (20%) per centum per annum. (2) Willful neglect to file, or false or fraudulent return . In case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully filed there shall be added to the tax or to the deficiency tax in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge of fifty (50%) per centum of its amount and the entire unpaid amount shall be subject to interest at the rate of twenty (20%) per centum per annum. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the falsity or fraud, in which case, the amount so added shall be collected in the same manner as the tax. SECTION 14 . Abolition of the Transactions Tax . The 35% transactions tax on commercial papers imposed under P.D. No. 1154 is hereby abolished: Provided , however , That income from commercial papers other than deposit or deposit substitutes shall now be subject to the appropriate income tax laws and regulations as provided under Section 3 hereof. cd SECTION 15 . Repealing Clause . All regulations, rules, orders or portions thereof which are inconsistent with the provisions of these regulations are hereby revoked. SECTION 16 . Effectivity . These regulations shall take effect immediately. (SGD.) EFREN I. PLANA Acting Minister of Finance Recommended by: (SGD.) RUBEN B. ANCHETA Acting Commissioner ANNEX A NAME OF BANK SCHEDULE OF COMPUTATION OF ONSHORE AND OFFSHORE INCOME AND THE CORRESPONDING INCOME TAX FOR THE YEAR ENDED ___________ Total Offshore Onshore All Total Interest Others INCOME: (Percentage of interest income) % % % % % Interest P_____ P_____ P_____ P_____ P_____ Discount _____ _____ _____ _____ _____ Gov't. Securities Interest _____ _____ _____ _____ _____ Foreign Exchange Dealings _____ _____ _____ _____ _____ Others _____ _____ _____ _____ _____ Total P______ P===== P===== P===== P===== Less: Interest Expense P______ P______ P______ P_____ P_____ Percentage of gross income % % % % % Gross Income P_____ P_____ P_____ P_____ P_____ Less: (1) Gen. & Adm. expenses P_____ P_____ P_____ P_____ P_____ (2) Head office expenses Total Expenses P_____ P_____ P_____ P_____ P_____ Net Profit before Taxes P_____ P_____ P_____ P_____ P_____ Provision for taxes (see computation below) NET PROFIT TO SURPLUS P_____ P_____ P_____ P______ P_____ COMPUTATION OF TAX Tax Tax Base Rate Amount of Tax 1) Offshore income P______ 5% P_______ 2) Onshore income (a) Gross interest income 10% (b) All others 25%-35% Total Tax Due (see above) P______