Inventory of Tax Provisions For Financial Institutions

Philippine Tax Rates for Financial Intermediaries
Banks
UNIVERSAL
Tax/Transaction Rate Rule
Regular Corporate Income Tax 30% of taxable net income Taxable Net Income = Income from operations less allowable deductions
(RCIT)
Representation and 1% of net sales
Entertainment
Interest Income 30% of taxable net income Unlike interest income subject to FWT (see below)
Service Fees, Commissions and Includes service icnome for money transfers, commissions, bank charges, management
30% of taxable net income
Trust Fees feets, and trust fees.
Gain/loss = gross selling price - cost or book value of the aset sold. A loss is a deductible
Net Gain from Sale of Real and item from taxable income.
Other Properties Acquired Cost/book value = original acquisition cost - depreciation claimed (without any
adjustment for impairment or revaluation).
Capital Gains Tax
1. Real Property 6% Final Tax Based on the gross selling price or FMV or zonal value, whichever is the highest
2. Shares of Stock
a. If listed and
traded in the local 1/2 of 1% of the selling price
stock exchange
b. If not listed and 5% on the first P100,000; 10% in
traded excess thereof.
Net Gain from other capital 30% of taxable net income Capital loss can be allowed as deduction only to the extent of capital gains.
assets
30% of taxable net income Trading losses are allowed as a deduction from taxable income
Redemption gains & trading gains from sale of bonds, debt securities, and other
Exempt from income tax. certificates of indebtedness with a maturity period of more than 5 years are exempt
Trading gain from income tax.
Trading gains arising from mark to market adjustments ; trading losses are non-
Non-taxable deductible.
Forex gain is an ordinary income if actually realized from a closed and completed
Forex gain 30% of taxable net income transaction.
1
Inter-corporate dividends received from domestic and resident foreign corporations are
Exempt from income tax.
Dividends exempt from income tax.
30% of taxable net income Dividend received from a non-resident foreign corporation.
Payable when the MCIT (2% of gross income) is greater than the regular income tax of 3-
% computed based on net taxable income.
Minimum Corporate Income Tax 2%of gross income
(For MCIT purposes) Gross income = gross receipts - (sales returns, allowances,
discounts) and (cost of services)
IAET does not apply to banks and other non-bank financial intermediaries because
Improperly Accumulated Tax Exempt financial institutions usually require fund build-upor accumulation.
Withheld at the source prior to the remittance. Based o the total profits applied or
Branch Profit Remittance Tax 15% final tax earmarked for remittance without any deduction for the tax compmonent thereof.
Interest Income subject to Final Interest income paid by banks to its depositors or investors
Withholding Tax (FWT)
From any currency bank deposit and yield or any other monetary benefit from deposit
20% FWT substitutes, trust funds, and similar arrangements.
a. If paid by a bank's RBU to
(i) an individual citizen ; (2)
individual resident alien and
(3) nonresident alien engaged from long-term deposit or investment in the form of savings, common or individual trust
in tradeor business within the 0% funds, deposit substitutes, investment management accounts and other investmets
Philippines. evidenced by certificates in such for prescribed by the BSP.
If the long-term investment was pre-terminated from 4 to less than 5 years before its
5% maturity.
12% 3 to less than 4 years
20% Less than 3 years
b. If paid by a depository 7.50% if paid to a citizen and resident citizen

bank under the EFCDS
0% if paid to a nonresident engaged in trade or business in the PH.
2
c. If paid to a non-resident 25% or applicable treaty
individual non engaged in
trade or business in the PH
0% If paid by a depository bank under the OBU or EFCDU.
From any currency bank deposit and yield or any other monetary benefit from deposit
20% substitutes, trust funds, and similar arrangements.
d. If paid to a domestic 7.5% if paid by a depository bank under the EFCDS
corporation and resident
foreign corporation If paid by an OBU or EFCDU to another resident OBU or EFCDU authorized by the BSP
0% under the expanded foreign currency
if paid to an OBU or EFCDU by residents other than OBUs or EFCDUs arising from foreign
10% currency by such OBU and EFCDU.
30% Or applicable treaty rate

e. If paid to a non-resident
foreign corporation 20% if arising from a foreign loan
0% If paid by an OBU or EFCDU
Interest Income of non-taxable
entities may still be subject to
FWT
Non-stock non-profit 20% FWT Imposed on interest income from deposists and deposit substitute instruments
corporations
Imposed on the interest income received by the currency bank deposits and yield of any
Non-stock non-profit monetary benefits from deposit substitutes or expanded foreign currency deposit since
20% or 7.5% FWT
religious organizations this is an income derived from personal property which is not covered by its tax
exemption.
Entities that enjoy Income 5% gross income tax Liable to FWT imposed on the interest income from bank deposits and deposit
Tax Holiday substitutes received by them
Imposed on their interest income received from currency bank deposits, deposit
Rural banks 20% FTW substitutes, trust funds, and similar arrangements.
3
Tax-exempt entities not subject
to income tax and to FWT.
Interest income from

investment received by
employees' tax qualified Exempt
retirement funds that are
put in trust accounts with
banks.

savings and time deposits,
bonds, treasure bills, and However, if these are not used actually, directly, and exclusively in pursuance of their
other bank notes ; foreign Exempt purposes as educational institutions, these shall be subject to the corresponding final
currency deposits paid to a taxes.
non-stock, non-profit
educational institution
Interest income derived by

non-stock savings and loan
associations from its
deposits and deposit
substitutes placed with
banks; interest income of Exempt
members from their
deposits with the
associations, and the
receipt of their share from
the net income of the
association
4
Interest income arising
from bonds issued by the
World Bank, International
Finance Corporation, ADB;
these organizations,
including their paying Exempt
agents, are exempt from
their obligation to
withhold taxes due on any
payments relative to the
bonds issued by them.
Interest income received

by a foreign government
including government
financing institutions and
regional and international
financing institutions
established by Exempt
governments, from
investments in the
Philippines in loands,
bonds, other domestic
securities, or from interest
on deposits in banks
10% FWT if paid to a citizen and resident citizen

20% if paid to a nonresident engaged in trade or business in the PH.
Dividend Income (cash and 25%, or the applicable treaty
property) paid by a bank to its rate if paid to a nonresident NOT engaged in trade or business in the PH.
stockholders
0% if paid to a domestic or a resident foreign corporation
30%, or the applicable treaty if paid to a nonresident foreign corporation
rate
Dividend income received by a
bank from its investment in Exempt
other companies
5
Dividend income received from
a non-resident foreign 30% of taxable net income
corporation
20% FWT Paid to a resident, citizen, a domestic foreign corporation
Royalties 25% FWT Paid to a non-resident alien not engaged in trade or business in the Philippines
30% FWT Paid to a non-resident corporation
1% Creditable Withholding Tax Purchases of goods
Purchase of services (interests, discounts, commissions, and other fees paid to banks by
Banks designated as Top Twenty 2% their clients).
Thousand Corporations
Exempt Purchases of goods and services through the use of credit cards
1/2 of 1% of the gross payments The bank is required to wthhold a CWT at such rate made to business entitites which
allowed the use of credit cards issued by the bank to cardhodlers.
Computed based on the grossed-up amount of payment to non-residents. To be

VAT 12% withheld by the banks on their payment to non-residents for the lease or use of property
or property rights (royalties) or for the performance of services in the Philippines.
Gross Receipts Tax (GRT)
(i) On interest,
commissions, and
discounts from lending
activities, as well as
income from financial 5% If the remaining maturity period is five years or less.
leasing, on the basis of the
remaining maturities of
the instruments from
which sucuh receipts are
dervied.
1% If the remaining maturity period is more than five years.
(ii) On dividends and
equity shares in net 0%
income of subsidiaries.
6
(iii) On royalties or rental
from real or personal
property, profits from 7%
exchange and all other
items treated as gross
income.
(iv) On net trading gains

within the taxable year on
foreign currency, debt
securities, derivatives, and 7%
other similar financial
instruments.
Documentary Stamp Tax (DST)

on shares of stocks
Par value; if without par value, it is based on actual consideration for the issuance of
P1 on each P200, or fractional shares
Original Issue part thereof
For stock dividends, it is based on the actual value represented by each share
P0.75 on each P200 or fractional Par value

Transfer of shares (sale part thereof
barter, exchange) not
through a local exchange 25% of the DST paid on original If without par value
issue
Transfer of shares (sale
barter, exchange) through Exempt
a local exchange
Sale or transfer in the P0.75 on each P200 or fractional Par value

Philippines of certificate of part thereof
stock issued in a foreign
country
25% of the DST paid on original If without par value
issue
7
on debt instruments
P1 on each P200, or fractional Issue price; if term is less than 1 year, a proportional amount based on a ratio of its term
Original Issue part thereof in number of days to 365 days.
Transfers, assignments,
sales, without alteration of Exempt
maturity date
If there is an alteration of Same as that imposed on
the maturity date or Same as that imposed on original document
original document
remaining coverage
Trading in the secondary Exempt
market
Sale or transfer in the
Philippines of certificate of Same tax imposed on similar
when issued, sold, Same bases used on similar instruments when issued, sold, or transferred in the
instruments
indebtedness issued in a or transferred Philippines
in the Philippines
foreign country
on bank deposits
Deposit substitute debt P1 on each P200, or fractional Issue price; if term is less than 1 year, a proportional amount based on a ratio of its term
instrument part thereof in number of days to 365 days.
Certificates or other
evidences of deposits
drawing interest
significantly higher than a P1 on each P200 or fractional Issue price; if term is less than 1 year, a proportional amount based on a ratio of its term
part thereof in number of days to 365 days.
regular savings deposit or
having a specific maturity
date
Bank deposit accounts
without a fixed term or Exempt
maturity
Certficate of deposits not P1.50 On each document
bearing interest
8
on bills of exchange
Bank checks, drafts, order

for the payment of money
issued by a bank, trust
company, or any person or P1.50 per document
company at sight or on
demand
Orders for the payment of P1 on each P200, or fractional Issue price; if term is less than 1 year, a proportional amount based on a ratio of its term
money other them at sight part thereof in number of days to 365 days.
or on demand
Bills of exchange between P0.30 on each P200 or a
points within the Face value or issue price of the instrument
fractional part thereof
Philippines; drafts
Acceptance or payment of
bills of exchange or order
for the payment of money P0.30 on each P200 or a Face value of the instrument, upon acceptance or payment of the order of bill of
purporting to be drawing fractional part thereof exchange
in a foreign country but
payable in the Philippines
Foreign bills of exchange

and letters of credit drawn P0.30 on each P200 or a Face value of the instrument, upon issuance of the order
in but payable outside the fractional part thereof
Philippines

on letters of credit and trust
receipt
Stage 1 - opening of the LC

(which may or may not P0.30 on each P200 or a LC drawn in, but payable outside the Philippines
include the opening of fractional part thereof
Trust Receipt line)
9
Stage 2 - Negotiation by P1.50 per document For drafts payable at sight or on demand
the beneficiary for
payment of the LC P0.30 on each P200 or a For drafts other than at sight or on demand
fractional part thereof
P20, when amount secured does
Stage 3 - Availment of the not exceed P5,000 Deeds of trust on properties made as a security for the payment of money
trust receipt line P10, on each P5000 in excess of
the first P5,000
P20.00 = when the amount

secured does not exceed P5,000
Documentary Stamp Tax (DST) Mortgages or pledges of lands, estate, or property, real or personal, heritable or
on mortgages, pledges, and On each P5,000, or fractional movable, whatsoever, where the same shall be made as a security for the payment of
deeds of trust part thereof, in excess of P5,000, any definite and certain sum of money
an additional DST of P10.00 is
imposed.
Documentary Stamp Tax (DST) P15 for every P1,000 or a Based on the selling price or consideration received or the fair market value as
on foreclosures and sales or fractional part thereof determined by the BIR, whichever is higher.
conveyances of Real and Other
Properties Acquired (ROPA)
Sales or conveyances of ROPA to a Special Purpose Vehicle (SPV) in transactions covered
Exempt by the SPV Act are exempt from DST
Documentary Stamp Tax (DST) Derivates including repurchase and reverse repurchase agreements and Interbank call
on Derivates and Interbank Call Exempt loans (IBCL) with a maturity of not more than seven days are also exempt from
Loans imposition of DST.
Assets held for sale or lease
1.5% CWT If the highest bid price of the property foreclosed is P500,000 or less
If the property foreclosed is an
ordinary asset held for sale or
lease by the debtor-mortgagor 3% If the higest bid price is more than P500,000 but less than P2 million
5% If the highest bid price is more than P2 million
0% For exempt sales
10
Other Ordinary Assets
If the property foreclosed

is an ordinary asset used in Based on the highest bid price; the amount withheld can be used as a tax credit against
the trade or business of
the debtor-mortgagor, but 6% CWT the income tax liabilities of the debtor-mortgagor who is required to declare the gain as
aprt of its taxable income subject to RCIT or IIT.
the property is not held
for sale or lease
The withholding tax shall be based on the amount of loan extinguished, which is the
Dacion en Pago outstanding balance of the loan plus unpaid interest, or the FMV of the property,
whichever is higher.
Sale of ROPA
GRT 7%
P15 for every P1,000 or a Based on the selling price or consideration received or the fair market value as
fractional part thereof determined by the BIR, whichever is higher.
DST
Sales or conveyances of ROPA to a Special Purpose Vehicle (SPV) in transactions covered
Exempt by the SPV Act are exempt from DST
The gain is subject to income tax as an ordinary income. Gain = total consideration
Income Tax 30% received - cost. Total consideration = selling price or zonal value or FMV of the property,
whichever is higher. Cost = original acquisition cost - accumulated depreciation.
CWT 6% based on the selling price or zonal value of the ROPA.

Shares of stock
a. If listed
and traded
in the local 1/2 of 1% of the selling price
stock
exchange
b. If not ROPA is considered an ordinary asset of the bank, hence, income dervied from its
listed and 30% RCIT original income subject to the regular corporate income tax.
traded
Sale of Chattel and other
personal property
RCIT 30%
GRT 7%
CWT 1% If the bank is a TTC.
DST Exempt
11
Government Bonds
20% FWT To be paid to buyers who are individual citizens
20% FWT To be paid to buys that are domestic or resident corporations
(i) Interest Income
10% FWT To be paid to FCDU buyers
These FWT shall be withheld at source at the time of payment of the coupons.
(ii) Any gain that may be
derived by the Subject to income tax if the bondholder/seller is an individual citizen, non-resident alien,
bondholders from the domestic corporation, and resident foreign corporation.
secondary trading of the
bonds Applicable tax treaty shall apply for non-resident individuals.
Interest earned by FCDUs from the bonds
Exempt Net trading gain derived from the secondary trading of the bond in view of the
restoration of the exemption of OBUs and EFCDUs.
(iii) GRT
7% Net trading gain dervied from the trading of bonds
5% If the remaining maturity period is five years or less.
P1 on each 200, or fractional
part thereof, of face value of the
(iv) DST bond.
Exempt Secondary trading of the bond is not subject to DST.
Bonds, mortgages, deeds

of trust or other similar
obligations of domestic or
resident foreign
corporations containing a
contract or provision The issuer is required to withhold such tax if the interest is payable to a non-resident
30%
under which the issuer alien or to a citizen or resident of the Philippines. (Sec. 57, NIRC)
agrees to pay any portion
of the tax imposed upon
the investor or to
reimburse the lender for
any portion of the tax
Derivatives
Gains (ordinary income) 30% of taxable net income
12
Realized gains/lossses derived from trading of financial products with derivatives based
7% on net trading gains
GRT
DST Exempt
Trading Gains and Losses
Gains from trading,
retirement, and
redemption of the Regular income tax applicable to
securities, and are not in individuals (Sec. 24, NIRC)
the nature of an interest
income
Long-Term Securities Exempt from income tax.
GRT 7% net gain from the trading of securities is a non-lending income
Trading of fixed income securities and shares of stock through a local exchange is exempt
DST Exempt from DST.
Finance Leasing
Leasing (RCIT)
GRT
Operating Lease 7% Operating lease
Finance Lease
DST
P3 for the first P2,000, or a
fractional part thereof; an
Operating Lease additional P1 for every P1,000 or
a fractional part thereof, in
excess of the first P2,000
*Note : There is no specific provision under the Tax Code imposing a DST on finance-
P1 on each 200, or fractional lease arrangements. However, considering that these are in the nature of debt
Finance Lease part thereof, of face value of the arrangements, these may be subject to a DST imposed on debt instruments under Sec.
bond. 179, NIRC.
13
Credit Card Financing
Income dervied by banks from credit card financing, such as discounts, interest income,
Income Tax 30% commissions, charges, and penalties, service fees, and membership fees, are considered
ordinary income subject to the 30% RCIT.
2% If the payor is a TTC, any payment to the bank is subject to 2% CWT.
CWT
1/2 of 1% of the gross payments Any payment made by banks for the purchase of receivables of the sellers/service
establishments in connection with a credit card financing
GRT
Discounts,
commissions, and 5% If the remaining maturity period is five years or less.
interest income
derived from credit
card financing 1% If the remaining maturity period is more than five years.
Other income
received such as
service fees, charges 7%
and penalties, and
membership fees
DST
Credit card
receivables arising Exempt
from trade sales or
service contracts
The assignment or
discounting of trade
receivables by the
seller (or service Exempt
establishments) to a
credit card company
or bank
14
TRUSTS AND INVESTMENT MANAGEMENT ACCOUNTS
Setting up the trust or IMA P15.00
Investment/Reinvestment of
Fund
DST
If invested in debt P1 on each P200 or fractional Face value
instrument part thereof
P1 on each P200 or fractional Of the par value if the original value;
If invested in shares part thereof
of stocks Exempt Secondary issuance and traded in an exchange
P200 or fraction thereof If secondary and not traded in an exchange
If invested in real P15 for every P1,000 or a Of the consideration or FMV whichever is higher.
property fractional part thereof
Income of the trust or
IMA
Subject to 20% FWT except if
Interest income long term
10% FWT citizen, resident individual
Dividence income 20% if non-resident alien engaged in trade or business
25% or applicable treaty Non-resident aliien not engaged in trade or business
Capital Gains from Sale of
shares of stock
a. If listed and
traded in the local 1/2 of 1% of the selling price
stock exchange
b. If not listed and Final tax of 5% on the first
100,000 of net gain and 10% in
traded excess thereof
Capital Gains from Sale of 6% FWT based on consideration,

selling price or FMV whichever is
real property higher.
Ordinary income of the trustor lumped with his other income subject to ordinary
Trading Gains income. No separate tax return for the trust.
15
Distribution of the
fundamental and Exempt Not a taxable transaction
income earned to
trustor/principal
Payment of fees
such as trust fees or Ordinary income of bank subject
to RCIT, and 7% BIR.
services
OFFSHORE BANKING UNITS and EXPANDED FOREIGN CURRENCY DEPOSIT
Offshore Income - Income

dervied by a depository bank
under the expanded foreign
currency deposit system from
foreign currency transactions
with nonresidents, offshore
banking units in the Philippines, Subject to two basic requirements: (1) Income is from a foreign currency transaction; (2)
local commercial banks including Exempt from all taxes Income must be from a transaction with a non-resident , another OBU or EFCDU.
branches of foreign banks that
may be authorized by the BSP to
transact business with foreign
currency deposit units and other
depository banks under the
expanded foreign currency
deposit system
Onshore income - interest

income derived by OBUs and 3 requisites: (1) it is an interest income; (2) the interest income is from foreign currency
10% FT
EFCDUs from residents other loans; (3) it is from a transaction with a resident other than an OBU or EFCDU.
than another OBU and EFCDU
Commissions, gains, and income from buying and selling of foreign currency from and to
Non-interest income 30% RCIT resident clients are subject to RCIT (CTA EB 113, Sep. 19, 2006)
16
Gains realized by EFCDUs/OBUs
from the sale, exchange, or
retirement of bonds debentures, Excluded from gross income,
exempt from final tax or regular
or other certificates with a income tax.
maturity period of more than 5
years.
Branch Profit Remittance Tax Exempt

subject to FWT at varying rates:
If paid to an individual citizen or individual residednt alien and nonresident alien

7.50%
Payment of interest by OBU or engaged in trade or business within the Philippines
EFCDU 0% If paid to a nonresident alien not engaged in trade or business in the Philippines
7.50% If paid to a domestic corporation and resident foreign corporation
0% If paid to another resident OBU or EFCDU
0% if paid to a nonresident foreign corporation
GRT Exempt
Only as far as those income which are also exempt. Any income subject to the 30% RCIT
MCIT Exempt is also liable to MCIT.
Interest income derived BY a
DOMESTIC corporation FROM 7.5% FWT
an EFCDU
RURAL, THRIFT, COOPERATIVE BANKS, GOVERNMENT BANKS
Rural banks
Taxes, fees, and charges of

whatever natur and description,
EXCEPT corporate income tax
and local taxes, fees, and Exempt RR 16-93
charges, CGT, CWT, All other
taxes imposed on income under
Title II of the Tax Code
RCIT 30%
MCIT 2%
17
on interest income from Philippine currency bank deposits and yield or any other
20% monetary benefit from deposit substitutes, trust funds and similar arrangements and
FWT royalties derived from sources within the Philippines
7.00% Foreign currency deposits
Subject to the same rate as
Thrift Banks banks and other financial Sec. 7, RA 8424
intermediaries
Credit Cooperatives and
Cooperative Banks
A. Cooperatives that Transact
with members only.
However, income of cooperatives, regardless of classifcation, which is not related to their
Income Tax on income main/principal business/es under their Articles of Incorporation shall be subject to
from operations appropriate national internal revenue taxes
VAT, GRT
3% percentage tax
On duly accredited charitable, research, and educational institutions, and reinvestment
Donor's tax in socio-economic projects within the cooperative's area of operations
Exempt
Excise tax
Provided that the other party to the taxable document/transaction who is not exempt
DST should be the one directly liable for the tax
Annual registration fee
All taxes on
transactions with Including, but not limited to the 20% FT on interest deposits and 7.5% final income tax
insurance companies on interest income derived from a depository bank under the EFCDS
and banks
B. Cooperatives dealing with
members and non members
with accumulated reserves Same as above
and undivided net savings of
not more than P10 Million
18
C. Cooperatives dealing with
members and non members
with accumulated reserves
and undivided net savings of
MORE than P10 Million
Members Same tax privileges as above
With respect to business transactions with non-members, they are required to pay the
Non-members following taxes:
On amount allocated for interest on capitals. The tax shall be based on the net surplus
Income tax arising from business transactions with non-members after deducting the amounts for
statutory reserve funds
On transactions with non-mebers, except those transactions exempt from the imposition
VAT of VAT under Sec. 109 L,M, N of the NIRC
On all sales of goods and/or services rendered to non-members, except sales made by
Percentage Tax producers,marketing or service cooperatives
All other internal
revenue taxes
unless specifically
exempted as
provided by law
Taxes not covered by the This applies to all cooperatives, regardless of classifcation
exemption
CGT on sale of
shares of stock,
exchange or other
dispostion of real
property classified as
capital assets
19
DST on transactions
of cooperatives
dealing with non-
members, except
transactions with
banks and insurance
companies provided
that the other party
to the taxable
document/transactio
n who is not exempt
should be the one
directly liable to the
tax.
VAT on purchases on
goods and services,
except VAT on
importation of
agricultural
cooperatives of
direct farm inputs,
machineries, and
equipment including
spare parts, for use
directly and
exclusive in the
productions and/or
processing of
produce purusuant
to Section 109(L) of
the NIRC.
All other taxes,
unless otherwise
specified.
Whatever tax regime applicable
Government Banks to private banks applies to
government banks
20
LOCAL TAXES
Local business tax
Municipality Maximum of 50% of 1% on the gross receipts of the preceding calendar year
MetroManila (City and Maximum of 75% of 1% on the gross receipts of the preceding calendar year
Municipality)
Real Property Tax (RPT)
Province Subject to RPT not exceeding 1% of the assessed value
MetroManila (City and Subject to RPT not exceeding 2% of the assessed value
Municipality)
Idle lands 5% ad valorem tax Additional
Special Education Fund 1% Additional
21
Non-Bank Financial Intermediaries
FINANCING COMPANIES
30% based on net taxable
Regular Income Tax income
Gross income of financing companies = gross receipts - returns, allowances, and
MCIT 2% of gross income cost of service; the general rules on MCIT of banks apply to financing companies
as well.
The general rules on withholding tax (both with respect to its withholding tax
Withholding Taxes obligations and the withholding required on its income) apply to financing
companies as well.
* CWT (if the payor is 2%
a TTC)
IAET Exempt Sec. 29, NIRC
Gross Receipts Tax
(i) Lending Income - on 5% If the remaining maturity period is five years or less.
interest, commissions,
and discounts 1% If the remaining maturity period is more than five years.
(ii) Non-lending income -
on income from interest,
commissions, discounts, 5%
and all other ites treated
as gross income
(iii) Financing companies 7% Applies to income derived from activities other than lending and finance leasing
with QB functions
The same rates of DST on documents and transactions entered into by banks
DST apply to financing companies, as well as its exemptions.
FINANCE LEASING COMPANIES
Income Tax (Regular income subject to the same rules on income taxation like other financing companies.
tax, MCIT, FT, CWT)
Taxable income under a The income received from leasing the property, undiminished by the amount
finance lease representing the return of capital, is includible in the gross taxable income of the
arrangement lessor.
22
Withholding Taxes
Lease payment made by
a lessee for the
continued use or
possession of personal 5% CWT on the gross rental or
property used in lease
business for which he
has not taken title, or in
which he has no equity
Lease payment under a

financial lease
arrangement with a While payments made under a finance lease arrangement may be claimed as a
Exempt from the 5% CWT for
leasing arrangement deductible expense from the taxable income of the lessee, such is not subject to
renatals of personal property
with a leasing and CWT on rentals of property.
finance company
authorized to operate
under RA 8556 1% CWT Applicable to purchases of goods if the lessee is a TTC.
Gross Receipts Tax
Subject to the GRT applicable to financing companies in general
Finance-Lease Income In computing the taxable gross receipts subject to GRT, only the interest income
or the interest component of the lease payment shall be included
Portion of the rental or

periodic payment that
pertains to the recovery
of the principal or Not a taxable receipt subject to GRT.
amortization for the cost
of the property being
leased
Rental income received

by a finance leasing
company from an subject to GRT for the full amount without deduction.
operating lease
arrangement
Computation of Interest
Component (RR 19-86)
Interest Income is recognized based on the outstanding principal balance of the loan or financial lease.
a. Annuity Method
Outstanding principal balance of lease facility X Lease rate factor = Lease income for a specific period
23
Interest income is recognes based on the outstanding pricinipal balance of the loan or financial lease.
b. Sum-of-the-years-digits (No. of remaining period payments / SYD) X = Total lease income = Lease income for a specific period
SYD = ( N(N +1) ) / 2 ,where N represents the number of period payments.
12% VAT Imposed on the rental income derived from the lease arrangement (RR 19-86)
Finance leasing income of a
non-financing company Imposed on the rental income , if the annual gross receipts do not exceed P1.5
3% percentage tax Million
P1 for every P200, or a fraction
DST thereof of the face value of the
lease.
Operating Lease
The lease payments actually earned plus the rental payments received in advance,
if any, shall be reported as income by the lessor in the year of receipt (BIR Ruling
Nos. 3-00;259-91; DA 509-06)
Income Tax
As the owner of the leased property, the lessor claims as deduction from its
taxable income the depreciation of the preoprty leased while the lessee claims
the rental payments as a deduction from its taxable income.
GRT
Rental income
received by a
finance leasing 5%
company from an
operating lease
arrangement
Rental income
received by a bank 7%
or quasi-bank
Rental income
received by an
entity other than a 12% VAT
financial
intermediary
Withholding Taxes
Rental Payment
under an operating 5% CWT (Sec. 2.57.2 ( C ) (2), RR-98)
lease
24
CREDIT CARD COMPANIES
Subject to taxes as a financing company. The interest income, discount revenue,
Income Tax (Regular income and other fees earned from its operations are subject to the same taxes imposed
tax, MCIT, FT, CWT)
on financing companies in general.
Withholding Taxes
On Income Received:
Interest income and other fees earned by card companies from its issuing
If paid by a TTC 2% CWT business, that is, from financing the purchases of cardholders is not subject to any
CWT, unless the cardholder is a BIR-designated TTC.
On Income Payments:
Gross payments to
merchants
representing the
sales of goods and 1/2 of 1% CWT Card companies are to withhold such CWT as a speciall rule
services made by
these business
entities to the
cardholders
On Purchases by
Cardholders
Taxpayers belonging to the top 20,000 private corporaations, large taxpayers,
Purchases made by government offices are not required to withhold the tax on their purchase of
TTC goods and services if payment is made through a credit card.
GRT subject to the same rules as that of a financing company
card companies are subject to DST on documents they issue and on transactions
DST they enter into that are subject to DST.
1. All forebearances arising from sales or service contracts, including credit card
and trade receivables, but the exemptions is limited only to those executed by the
seller or service provider itself.
Transactions exempt
from DST 2. Assignment or transfer of any contract or any evidence of obligation or
indebtedness, if there is no change in the maturity date or remaining period of
coverage. The transfer or assignment of the merchange receivables to the card
company upon discounting is NOT subject to DST.
25
SPECIAL PURPOSE VEHICLE (SPV)
An SPV is a nonbank financial institution performing activities similar to a financing company. Its main activity is to invest in and acquire loans,
receivables, and other evidence of indebtedness. Its income and transaction are subject to the same taxes imposed on financing companies.
GOVERNMENT FINANCING INSTITUTIONS
Home Development Mutual Subject to all taxes applicable to a financing company.
Funds
30% based on net taxable Considered habitually engaged in the real estate business ; acquired assets are
Sale of foreclosed assets income ordinary assets of the HDMF, therefore subject to withholding tax rates applicable
to its members to entities habitually engaged in the real estate business (BIR Ruling No. DA-209-
02, Nov. 15, 2002)
12 % VAT
Home Guaranty Corporation
Interests and yields

earned or accumulated
on mortgage,
debentures, bonds,
notes, mortgage and
assset-backed securities, Exempt from all taxes to the
interests under lease and extent of the weighted average
other credit instruments, interest rate of 10.15%
whether issued by the
HGC or covered by its
guaranty in favor of
natural and juridical
persons, in cash or in
bonds
Exempt from income tax to the

Discounts earned from Any excess is subject to income tax, either to the 20% FWT if it qualifies as a
extent of an average of 10.15%
HGC zero-coupn bonds deposit substitute, or regular income tax (BIR Ruling No. 026-02, June 27, 2002)
interest rate
INVESTMENT COMPANY
30% based on net taxable Except on income already subjected to final tax. Also subject to MCIT, withholding
Income Tax income taxes.
26
Final Tax

currency bank deposits
and yield or other
monetary benefit from 20%
deposit substitutes and
from trust funds and
similar arrangements

foreign currency deposit 7.50%
with a depository bank
under EFCDS
Cash and property

dividend received from a 0%
domestic corporation
Sale of shares listed and
traded through the stock 1/2 of 1% stock transaction tax
exchange
On the sale of shares of

stocks not listed and 5% on the first 100,000 of net
traded through the stock gain and 10% in excess thereof
exchange
Mutual Fund
Contribution to Collective Not deductible from taxable income of contributor/shareholder
Investment Scheme
Issuance of original shares of DST - P1 per 200 of par value of
mutual fund original issuance of shares
Subject to a final tax depending on the nature of the investment income. Income
Income of the fund from not subject to a final tax is taxable to the investment company as ordinary income
investments subject to 30% RCIT unless it is exempt under certain laws.
27
Distribution of the income to
investors
Dividends
10% FT Individual citizen/Resident alien
20% Non-resident alien engaged in trade or business
25% Non-resident alien not engaged in trade or business
30% or tax treaty Non-resident foreign corporations
Exempt Dividends distributed to resident corporate investors
Excluded from gross income and is consequently exempt from income tax
Redemption Gains Exempt/Exclude pursuant to Sec. 32 (B)(7)(h), NIRC.
Unit Investment Trust Funds (UITF)
Investment Scheme
Issuance of certificate of units DST - P15 per certificate of units

of participation in UITF of participation. (Sec. 188, NIRC)
Distribution of the income to Exempt Distribution of income of the UITF/trust to the investor/trustor
investors
Variable Unit Link
Investment Scheme
DST - P0.50 per P200.00 of
Issuance of insurance policy the amount of premium (Sec. 183, NIRC; RMC 59-2008 and 49-2010)
with VUL collected, including the
contributions to the fund
Gains realized by the policyholder from redemption of units of shares in the VUL
Distribution of the income to are taxable to the policyholder/invest or as ordinary income subject to regular
investors individual income tax (RMC 30-08 as amended by RMC 59-08 and 49-2010)
28
INVESTMENT HOUSE
Income Tax (Regular income subject by the same tax rules as those imposed on other financial intermediaries.
tax, MCIT, FT, CWT)
RCIT 30%
Investment house with QB subject to taxation rules applicable to banks and other nonbank financial
functions intermediaries/institutions (NBFIs) with QB functions
IAET Exempt
GRT
* Investment house with
QB functions 1% If the remaining maturity period is more than five years.
7% Non-lending income
* Investment house 5%
without QB functions
same rate of DST as those imposed on banks and other NBFIs ; applicable even on
documents in electronic form; the issuance of electronic documents, which are
DST the functional equivalent of written docuemtns, is tantamount to the issuance of
written documents (Sec. 10, RR 13-04)
SECURITIES BROKERS AND DEALERS
30% based on net taxable Subject to the same manner as other entities engaged in business as a seller of
Income Tax income service.
IAET 10%
Sale, barter, or exchange of shares of stock listed and traded through the local
Stock Transaction Tax Exempt stock exchange by a dealer is not subject to a STT
imposed on the total gross receipts; only when the sale of shares of stock was
VAT 12% sold by a dealer of securities.
A dealer in securities is subject to the same DST with respect to its own
DST transactions or taxable documents issued by it.
29
Taxation of Sale, Barter, Exchange, or Other Disposition of Shares of Stock held as Capital Assets
Imposed on the net capital gains realized during the taxable year from the sale,
5% on the first 100,000 of net barter, exchange or other disposition of shares of stock in a domestic corporation,
Capital Gains Tax gain and 10% in excess thereof EXCEPT on listed and traded shares sold or disposed of through the stock
exchange
Due on every sale, barter, exchange, or disposition of shares of stock listed and
Stock Transaction Tax 1/2 of 1% traded through the local stock exchange by a person other than a dealer in
securities.
Every sale, barter, exchange or disposition through IPO of shares of stock in

4% if the proportion is 25% or closely held corporations is subject to IPO tax based on the gross selling price or
less gross value in money of the shares of stock sold, bartered, exchanged, or
otherwised disposed.
Initial Public Offering Tax (IPO)
2% if 25% up to 33 1/3% The rate is based on the proportion of shasres of stock sold, bartered, exchanged,
or otherwise disposed of to the total outstanding shares of stock after the listing
in the local stock exchange.
1% if over 33 1/3%
The sale, barter, exchange, or disposition of shares of stock listed and traded
through the local stock exchange (RA 9243; RA 9648)
The borrowing and lending of securities agreement executed under the Securities
Exempt Borrowing and Lending Program of a registered exchange, or in accordance with
DST regulations prescribed by the appropriate regulatory agency
The trading of fixed income and other securities in the secondary market or
through an exchange
P1 per 200 of par value of
original issuance of shares
Involves the lending of shares of stock or securities by the lender, who owns or
controls them, to the borrower who needs the sahres of stocks/securities
Securities Borrowing and Exempt from DST, STT, and CGT borrowed to support trading strategies or settlement obligations, in exchange for
Lending Transactions a collateral and the promise to return teh equivalent shares of stock/securities at
teh end of the borrowing period which cannot be more than 2 years.
30
Entered into between financial institutions and between financial institutions and
Cash-Settled Securities Swap the BSP, to simultaneously buy or sell governmeent securities spot and sell or buy
Exempt from DST
Transactions comparable securities at a pre-determined future date and price with the same
counter-party (RMC 62-03)
PDex Repo Program BIR Ruling No. 16-2010, June 29, 2010
* Interest Income 20% FWT Income from the repurchase transaction
The repo transaction being a loan, the income dervied therefrom is an interest
* GRT 5% income and not capital gains. Considering that the repo transaction si with a
tenor of not more than 3 months, the GRT applicable is 5%.
Exempt Repurchase transaction
P20, when the amout does not
exceed P5,000 The transfer of collateral securities from the rep seller/cash borrower to the repo
* DST
Additional P10, on each P5,000 buyer/cash lender shall not be subject to CGT but subject to DST as pledge under
or fractional part thereof in Section 195, NIRC.
excess of P5,000
PHILIPPINE STOCK EXCHANGE
Gains realized from the sale of a membership seat is part of the seller's gross
Membership seat in the PSE 30% based on net income income subject to regular income tax (BIR Rulig Nos. 151-98 and 349-87)
OTHER NON-BANK FINANCIAL INTERMEDIARIES
Pawnshops
Income Tax (Regular income subject to the same taxes as that of other NBFIs; 30% RCIT if corporation, 5-32% if
tax, MCIT, FT, CWT) sole proprietorship
IAET Exempt
GRT 1% If the remaining maturity period is more than five years.
(RR 10-04)
P20, when the amout does not
exceed P5,000
DST Additional P10, on each P5,000 Sec. 195, NIRC
or fractional part thereof in
excess of P5,000
Money Changers or Foreign Exchange Dealers
30% RCIT
Income Tax
5 - 32% individual income tax If sole proprietorship
31
Gross receipts from commissions, fees, net gains from foreign currency trading
GRT 5% and other items of income
Lending Investors
Must be established as a corporation only; not classified as financial
Income Tax 30% RCIT intermediaries for taxation purposes
MCIT 2%
IAET 10%
VAT 12%
Nonstock savings and loan associations (NSSLAs) and Building and loan association (BLAs)
NSSLA
Includes the 20% final tax imposed on interest income
* Income Tax Exempt
Includes the interest earnings of its members
any income dervied from any of NSSLA's properties, real or personal, or any
Subject to income tax activity conducted for profit, regardless of the dispostion thereof, is subject to
income tax. (RA 8367)
*Income from Exempt from income tax, CGT,
properties Sale of foreclosed properties used as collaterals to secure the loans of the
withholding taxes; subject to members
DST
6% FT on the basis of the gross Sale of foreclosed properties not actually used in the conduct of the association's
selling price or FMV business
Sale of shares listed and
traded through the stock 1/2 of 1% stock transaction tax
exchange
On the sale of shares of

stocks not listed and 5% on the first 100,000 of net
traded through the stock gain and 10% in excess thereof
exchange
BLA
* Income Tax Exempt Includes the 20% final tax imposed on interest income
Exempt from all taxes including
* BLAs guaranteed by those imposed on its franchises,
the HGC capital, reserves, surplus, and its
loans, receipts, and incomes.
32
* GRT
Trust Companies
Income Tax (Regular income subject to the same provisions as those of NBFIs
tax, MCIT, FT, CWT)
Any distribution of the income
of a trust and any return of the Not taxable transaction subject
fund to the trustor by the to tax
trustee
Venture Capital Corporations
The business operations of a venture capital company shall be taxed in the same manner as other NBFIs.
33
Taxation of Insurance Companies
Insurance Companies
LIFE INSURANCE
Income Tax 30% RCIT ; 2% MCIT
Income from the investment of premium collected is not subject to premium tax,
2% based on premiums
Premium Tax but income from the investment of pooled funds from policyholders is subject to
collected premium tax
From P10 to P100 depending on
DST the face value of policy
Imposed on their management fees, rental income, and other income from
VAT 12% VAT services pursued independent of insurance business. Premium not subject to VAT.
Not subject to premium tax, GRT, VAT

On interest from currency bank deposits, deposit substitutes, trust funds, similar
20% FT arrangements
7.5% FT On interest income from FCDU of banks.
On the interest income paid by banks identified as TTC strictly arising on loans
made to such banks that are not securitzed, assigned, or participated out and not
Interest Income otherwise subject to 20% FT or 7.5% FT
2% CWT
On interest income received by banks from payors belonging to TTC arising from
loans obtained from such banks that are not securitized, assigned, or participated
out, and not otherwise subject 20% FT and 7.5% FT
on interest income from debt securities not subject no 20% FT, 7.5% FT, or 2%
20% CWT CWT
Ordinary Assets 30% RCIT ; 2% MCIT Ordinary income subject to RCIT, MCIT
6% based on the gross selling
price or the FMV or the zonal
Capital Assets value of the asset, whichever is
highest.
Sale of shares listed and traded 1/2 of 1% stock transaction tax

through the stock exchange
34
On the sale of shares of stocks 5% on the first 100,000 of net
not listed and traded through gain and 10% in excess thereof
the stock exchange
Trading Gains derived from the

sale of bonds, debt securities, 30% RCIT ; 2% MCIT
and other certificate of
indebtedness
Redemption gains with a

maturity period of more than 5 Exempt
years
Foreign Exchange gains 30% RCIT ; 2% MCIT
actually realized
Dividends
Received from domestic
and resident foreign Exempt from income tax
corporation
Received from non-
resident foreign 30% RCIT ; 2% MCIT
corporation
Released reserves 30% RCIT ; 2% MCIT
Other income (management
fees, commission income, re-
issuance fees, reinstatement 30% RCIT
fees, renewal fees,
underwriting income)
IAET Exempt
If the total income from transactions subject to VAT exceed P1,919,500 (RR-16-
Percentage tax 3% 2011, Oct. 27, 2011), it shall exempt from VAT, but would be subject to percentage
tax.
Exempt General rule
Premium Income
2% If the payor is TTC
Rental Income 5%
35
Withholding Tax on Income
Payments
Professional fees paid to 15% CWT if the gross income for the current year exceeds P720,000 ; 10% if otherwise
insurance agents
Commissions or fees
paid to insurance brokers 10% CWT
Rental of reeal or 5% CWT
personal property
Interest paid to a non-
resident foreign 30% FT
company for loans
Interest paid on
reinsurance premium 20% FWT
retained
If the insurance company 1% CWT Purchases of goods

is among the TTCs
2% CWT Purchases of services
Rate of DST on Life Insurance Sec. 183, NIRC
Policies
If the amount of
insurance does not Exempt
exceed P100,000
If the amount of
insurance exceeds P10
P100,000 but does
not exceed P300,000
If the amount of
P300,000 but does
not exceed P500,000
If the amount of
P500,000 but does
not exceed P750,000
36
If the amount of
insurance exceeds
P750,000 but does P75
not exceed
P1,000,000
If the amount of
P1,000,000
Local Business Tax on Life
Insurance Companies
Municipality)
Unit-Linked Insurance Product (ULIP)
Income Tax subject to income tax similar to traditional insurance products
The portion of the premoum received that forms part of the segregated
2% based on premiums
Premium Tax investment accounts/the portion in excess of the amounts necessary to insure the
collected lives of the insured is not subject to the 2% premium tax
Variable Unit Link
Investment Scheme
DST - P0.50 per P200.00 of
Issuance of insurance policy the amount of premium (Sec. 183, NIRC; RMC 59-2008 and 49-2010)
with VUL collected, including the
contributions to the fund
Gains realized by the policyholder from redemption of units of shares in the VUL
Distribution of the income to are taxable to the policyholder/invest or as ordinary income subject to regular
investors individual income tax (RMC 30-08 as amended by RMC 59-08 and 49-2010)
Management fees 30% RCIT ; 2% MCIT
37
Premium Deposit Fund (PDF)
Premiums received on account Subject to income tax, premium tax, and DST similar to a VUL or a traditional life
of the life insurance solicited insurance
from the policyholder
Instrument issued to the

policyholders evidencing exempt from DST
deposits
Premium tax 2% Business tax imposed on its main activity as a life insurance company
Interest earned by the Exempt from 20% FWT (Sec. 24B
policyholder (1); 25A(2); 27D(1); 28(A)(7)
Group Life Insurance
Income Tax 30% RCIT; 2% MCIT Taxed in the same manner as any other life insurance policy
Premium Tax 2%
DST Sec. 183, NIRC
The DST on GLI under Sec. 183 of NIRC is different from the P15.0 DST imposed on
DST on individual certificates P15.00 the issuance of individual certificates under Sec. 188.
Premium paid for GLI Not deductible if employer is the beneficiary
Premium for GLI Not subject to fringe beneft tax
Health and Accident Insurance
Income Tax, Premium, DST Treated as life insurance contracts
Compensation for injuries or Exempt from income tax
sickness
Proceeds of Life Insurance and
Returns of Premium
Proceeds of life insurance paid However, if held by the insurer under an agreement to pay interest, the interest
to the heirs or to the Excluded from gross income payments shall be included in the gross income of the heir or beneficiary
beneficiaries
Return of premium/policy Policy dividends was considered a "return of premium" in the case of Republic of
Excluded from gross income
dividends the Philippines v. Sunlife Assurance, GR No. 158085
Proceeds of an irrevocable life Not subject to estate tax unless

the beneficiary is the estate
insurance policy itself.
Proceeds of a revocable life Subject to estate tax It will form part of the policyholder's gross estate upon his death.
insurance
38
Premium Tax
* Total Premium collected 2%
* Premium refunded within
6 months
* Premium on reinsurance
of a company that has
already paid the tax
*Premiums received on
account of any life
insurance or reinsurance of
a non-resident insured if tax Excluded
on premium is imposed by
foreign country where
foreign branch or original
insurance was issued
* Portion of premium on
variable contract in excess
of amount necessary to
insure life of insured
* Premium collected on
Health and Accident 2%
Insurance
* Income from investment Exempt
of the premium received
* Income from investment
of funds pooled from 2%
policyholders
Other miscellanous income 2%
related to life insurance
Other miscellanous income 12 VAT
not related to life insurance
39
DST
Life insurance policies,
including variable life Sec. 183
insurance policies
Health and Accident Insurance Sec. 183
Transfer or assignment of life

insurance policies with a
change in the maturity or Sec. 183
remaining period of coverage
of the policy
Renewal of life insurance Sec. 183

policy
Transfer or assignment of life

insurance policies and there is
no change in the maturity or Exempt
remaining period of coverage
of the policy
Instrument issued to evidence Exempt RMC 30-2008, as amended by RMCs 59-2008 and 49-2010
deposits in PDF
Certificates of Coverage Sec. 188
NON-LIFE INSURANCE
The same rules on taxation of income from investment by a life insurance apply as
Income tax 30% RCIT ; 2% MCIT well to non-life insurance companies.
Percentage tax Exempt
Non-life insurance premiums received by insurance companies are generally
VAT 12% based on gross receipts subject to VAT and not to premium tax; gross receipts includes total premiums
collected (not premiums charged nor premiums earned)
40
Premiums excluded from VAT
* Premiums refunded
witihin the six months
after payment on Must be actually refunded, not merely recognized or accrued, within six months
account of rejection of from receipt of the premium of the insured.
risk, or returned for
other reasons to the
person insured.
* Premiums on
reinsurance of a
company that has
alreadyb paid the tax
* Premiums on account Excluded from VAT
of any reisurance, if the
risk insured against
covers property located
outside the Philippines
* DST and local taxes

passed-on by the
insurance company to
the insured
* VAT passed-on to the
insured
IAET Exempt
Insurance and reinsurance
commissions whether on life 12% VAT
or non-life
Normally subject to VAT except when VAT has already been paid on the direct
Reinsurance Premium 12% VAT premium (when the VAT has already been paid by the direct insurer)
Premiums received from health and accident insurance contracts underwritten by
Health and Accident Insurance 2% Premium Tax non-life insurance companies are considered premium on life insurance, and
therefore subject to premium tax, not VAT.
Not subject to business tax, VAT, CIR v. Philippine American Accident Insurance Co. (March 18, 2005)
Investment income premium tax, GRT
Rental Income 12% VAT
41
Service fees, policy administration fees, penalty charges, and other income
Incidental Income 12% VAT ancillary to non-life insurance business
Non-life insurance premium

received by a non-life
insurance company from the
government or any of its 5% Final Withholding VAT The premium received is no longer subject to 12% VAT.
political subdivisions,
instrumentalities or agencies,
including GOCCs
DST
12.5% or P.0.50 on each P4, or
* Non-life insurance policies fractional part thereof, of the
amount of premium charged
* Health and Accident Sec. 183
Insurance
* Reinsurance contracts not subject to DST
Local Business Tax on Non-Life Subject to the same manner and under the same rules as that applicable to life
Insurance Companies insurance companies.
Surety, Fidelty, Indemnity, and Bonding Companies
Income Tax and VAT subject income tax and VAT the same manner as non-life insurance companies
DST
12.5% or P.0.50 on each P4, or Sec. 185; See Philippine Health Care Providers, Inc. v. CIR, GR 167330, Sept.
DST on Fidelity Bonds fractional part thereof, of the 18,2009
7.5% or P0.30 for every P4, or
DST on Indemnity Bonds fractional part thereof, of the
Health and Accident Sec. 183
Insurance
Non-life insurance 12.5% or P.0.50 on each P4, or
policies other than on fractional part thereof, of the
health and accident amount of premium charged
Certificates of Coverage P15.00
42
Transfer or assignment of
policies with a change in
the maturity or Exempt Sec. 199, NIRC
remaining period of
coverage of the policy
Renewal of insurance Same as issuance of original contract

policy
Transfer or assignment of
life insurance policies
and there is no change in Same as issuance of original contract
the maturity or
remaining period of
coverage of the policy
Reinsurance Contracts Exempt

Insurance policies
covering properties Exempt
outside the Philippines
REINSURANCE COMPANIES
Income Tax Taxed in the same manner as any other life insurance policy or non-life insurance
VAT
Reinsurance companies 12% VAT
Reinsurance premiums,
the VAT on which has
lready been paid by the Exempt
direct insurer
Reinsurance premium
received by a non-life
insurance company from
the government or any
of its political 5% Final Withholding VAT The premium received is no longer subject to 12% VAT.
subdivisions,
instrumentalities or
agencies, including
GOCCs
43
Interest paid to non-resident 20% final tax, or applicable
reinsurers on retained treaty
premium
Reinsurance commissions 12% VAT
DST Exempt
Local Tax Same manner as life and non-life insurance companies.
Premiums Paid to Foreign Insurance Companies
Income Tax Exempt Section 28B, NIRC
VAT Exempt RR 16-05 as amended by RR 04-07
PRE-NEED COMPANIES
Subject to the same manner and under the same rules as that applicable to
Income Tax, MCIT, WT insurance companies.
based on gross receipts from premoums net of amounts contributed to trust
VAT 12% VAT funds (RR 16-2005)
Amount contributed to the Exempt from VAT
trust fund
P.020 on each P200, or fractional

DST part thereof, of the premium or
contribution collected
Local Taxes
* Pre-need company engaged Classified as an insurance company which falls within the category of "banks and
in the sale of pre-need health other financial institutions" (Sec.143(f), LGC)
care plans
Municipality)
* Health care plans sold by-pre 50% of 1% Treated as insurance companies; Sec. 143(f), LGC
need companies
* Educational and memorial Falls within the purview of contractor subject to business tax at the rate of 50% of
service pre-need plans or 50% of 1% 1% (Sec. 143e, LGC)
contracts
44
Pension and Retirement Funds
Income of the fund is exempt from income taxes and the distribution of the fund
to the beneficiary retired employee is not a taxable income to him. Any
Exempt from income tax contribution by an employer to the fund is not taxable to the employee as fringe
Reasonable Private Retirement benefit or compensation.
Plants
Contributions to retirement funds, including past service costs, are deductible
from the taxable income of the employer. It is not also a taxable income to the
employee.
Subject to the following conditions: (RA 7641)
Retirement benefits Exempt from income tax At least 10 years in service, no less than 50 years old when retiring.
Availed by an official or employee once.
* Must be put in a trust account ; only trusteed retirement plans can qualify for
tax exemptions
Multi-tiered employee Tax exempt
retirement plan
MUTUAL INSURANCE COMPANIES and PURELY
30% RCIT; 2% MCIT Although, it may qualify as a tex exempt entity under Sec. 30 of NIRC, as follows:
Mutual savings bank not having a capital stock represented by shares, and
cooperative bank without capital stock organized and operated for mutual
purposes and without profit
Income Tax
A beneficiary society, order or association, operating for the exclusive
benefit of the members such as a fraternal organization operating under the
lodge system, or mutual aid association or a nonstock corporation organized
by employees providing for the payment of life, sickness, accident, or other
benefits exclusively to the members of such society, order, or association, or
nonstock corporation or their dependents
Premium Tax Exempt

VAT 12% VAT Unless they register with the CDA, they are subject to VAT on their income.
Purely cooperative company:
non-agricultural, non-electric, Exempt from VAT Sec. 199(N), NIRC
non-credit cooperatives duly
registered with CDA
DST Exempt
45
Exemptions of Cooperatives
registered with CDA
* Transacting with members
only
Income Tax
VAT
Percentage tax
If imposed on duly accredited charitable research and educational institutions and
Donor's Tax reinvestment to socio-economic projects within the area of operation of the
cooperatives.
Excise Tax
Provided that the other party to the taxable document/transaction which is not
DST exempt shall be directly liable for the tax
Annual registration
fee of P500 Exempt
All taxes on
transactions with
insurance companies
and banks inlcuding
but not limited to 20%
final tax on interest
deposits and 7.5%
final income tax on
interest income
derived from a
depository bank
under the EFCDS
* If dealing with members and
non-members
a. Accumulated reserves
and undivided net It shall enjoy the same tax exemption privileges accorded to insuranec
savings of not exceeding cooperatives dealing exclusively with members
P10 Million
46
Exempt from all national internal revenue taxes on its business transactions with
b. Accumulated reserves members
and undivided net
savings exceeding P10 Business transactions with no-members will be subject to income tax on the
Million amount allocated for interest on capital, VAT, Percentage tax, and all other internal
revenue taxes unless provided otherwise by law
Local Business Tax Exempt
All income of insurance

cooperatives not related to its
main or principal business
under its Articles of
Incorporation, regardless of
whether dealing with
members or non-members
shall be subject to taxation.
The tax exemption privileges of

insurance cooperatives,
regardless of classification, will
not include the following:
CGT from the sale of

shares of stock or sale,
exchange or other
disposition of real
property classified as
capital assets.
DST on transactions of
cooperatives dealing
with non-members
VAT billed on purchases
of goods and services
Withholding tax on
compensation/wages
47
All other taxes for which
cooperatives are directly
liable and not otherwise
expressly exempted.
TAXATION OF HEALTH MAINTENANCE ORGANIZATION (HMO)
Income Tax 30% RCIT ; 2% MCIT
IAET 10% Because they are not insurance companies
BPRT 15%
Because they amerely arrange for the provision of health care services, not render
VAT 12% medical services themselves.
HMOs are not considered insurance companies and lacks the requirements under
DST Exempt Sec. 185 of NIRC. (Philippine Health Care Providers, Inc. v. CIR, GR 167330, Sept.
18, 2009)
Income paid to medical
practitioners
If income does not 10% CWT
exceed P720,000
If income exceeds 15% CWT
P720,000
GOVERNMENT INSURANCE
GSIS
Exempt from all taxes, Not exempt from VAT passed-on by suppliers on its purchases ; not exempt as
assessments, fees, charges, or withholding agent.
duties of all kinds
Excluded from gross income to the extent of the mandatory or compulsory
Contributions contributions.
Benefits Exempt
SSS
Exempt from all taxes,
assessments, fees, charges, or
duties of all kinds
Benefits Exempt
Employer's share is a deductible expense for income tax purposes; Employees'
Contributions mandatory contributions are specifically excluded from the gross income
48
AFP-RSBS
Exempt from all taxes,
assessments, fees, charges, or
duties of all kinds
Contributions Tax deductible for income tax purposes
Benefits
Philippine Deposit Insurance Corporation
Income Tax, FWT, VAT Exempt RA 9576
Debt Issuances Exempt Fully guaranteed by the government
Philippine Crop Insurance Corporation
Taxation in general Subject to tax like any other insurance company
Premiums paid by agricultural
producers for their crop Exempt from VAT
insurance
Philippine Health Insurance Corporation
Contributions and all accruals
on its income and investment Exempt
earnings
The exemption did not cover PHIC's obligation as a withholding agent of
Withholding Tax government money payments on purchases from suppliers and service providers
such as medical practioners, hospitals, and clinics.
INSURANCE AGENTS AND BROKERS
5-32% if sole proprietorship
Income Tax
30% RCIT; 2% MCIT
If the gross receipts of the insurance agent/broker for the past 12 months exceed
12% VAT + P500 annual fee P1,919,500.00 (VAT Threshold), or there are reasonable grounds to believe that it
VAT would exceed such
3% percentage tax + P500 If the gross receipts did not exceed the VAT threshold
annual fee
Payment of commissions to 10% or 15% CWT
agents and brokers
* Commissions paid to 10%
insurance brokers
10% If the gross annual income does not exceed P720,000
* Commissions paid to agents
49
* Commissions paid to agents
15%` If the gross annual income exceeds P720,000
Commissions and other means of earnings of insurance agents and service
representatives and insurance brokers may be levied an occupation fee pursuant
Local Business Taxes to Sec. 147, LGC, while the gross receipts of insurance brokers may be levied on
contractors and/or independent contractors pursuant to Sec. 143(e), LGC. (Sec.
2(e)(f) of LFC 2-93)
50

Inventory of Tax Provisions For Financial Institutions

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Inventory of Tax Provisions For Financial Institutions

Uploaded by

Copyright:

Available Formats

Philippine Tax Rates for Financial Intermediaries

b. If paid by a depository 7.50% if paid to a citizen and resident citizen

30% Or applicable treaty rate

Interest income from

Interest income from

Interest income derived by

Interest income received

10% FWT if paid to a citizen and resident citizen

Computed based on the grossed-up amount of payment to non-residents. To be

Gross Receipts Tax (GRT)

(iv) On net trading gains

Documentary Stamp Tax (DST)

P0.75 on each P200 or fractional Par value

Sale or transfer in the P0.75 on each P200 or fractional Par value

Bank checks, drafts, order

Foreign bills of exchange

Documentary Stamp Tax (DST)

Stage 1 - opening of the LC

P20.00 = when the amount

If the property foreclosed

CWT 6% based on the selling price or zonal value of the ROPA.

Bonds, mortgages, deeds

Capital Gains from Sale of 6% FWT based on consideration,

Offshore Income - Income

Onshore income - interest

Branch Profit Remittance Tax Exempt

If paid to an individual citizen or individual residednt alien and nonresident alien

Taxes, fees, and charges of

Lease payment under a

Portion of the rental or

Rental income received

Interests and yields

Exempt from income tax to the

Interest income from

Interest income from

Cash and property

On the sale of shares of

Issuance of certificate of units DST - P15 per certificate of units

Every sale, barter, exchange or disposition through IPO of shares of stock in

On the sale of shares of

Not subject to premium tax, GRT, VAT

Sale of shares listed and traded 1/2 of 1% stock transaction tax

Trading Gains derived from the

Redemption gains with a

If the insurance company 1% CWT Purchases of goods

Management fees 30% RCIT ; 2% MCIT

Instrument issued to the

Proceeds of an irrevocable life Not subject to estate tax unless

Health and Accident Insurance Sec. 183

Transfer or assignment of life

Renewal of life insurance Sec. 183

Transfer or assignment of life

* DST and local taxes

Non-life insurance premium

Renewal of insurance Same as issuance of original contract

Reinsurance Contracts Exempt

P.020 on each P200, or fractional

Premium Tax Exempt

All income of insurance

The tax exemption privileges of

CGT from the sale of

You might also like