RMO No. 02-2018: Prescribes the guidelines and procedures in implementing RA No. 10693 (Microfinance NGOs Act)

Key points

1. Who qualifies. Microfinance NGOs with a Certificate of Accreditation from the Microfinance NGO Regulatory Council may use the 2% gross receipts tax on microfinance income, in lieu of all national taxes. The NGO’s primary purpose must be microfinance, and the rate applies only to operations serving the poor and low-income individuals.
2. What the 2% covers. The rate applies only to lending activities and insurance commissions that are bundled with and integral to the qualified lending. All other income is subject to all applicable taxes.
3. Registration. Accredited Microfinance NGOs and their clients must have a TIN. NGOs already registered with the BIR update their registration with the Revenue District Office using BIR Form No. 1905.
4. Books and receipts. Each NGO keeps books of accounts and records and is subject to periodic examination. An NGO with other businesses keeps separate books. It applies for an Authority to Print using BIR Form No. 1906, and separately for any other business.
5. Filing and withholding. The 2% tax is filed and paid on BIR Form No. 2551M. Because the new ATC PT118 is not yet in eFPS and eBIRForms, filing and payment are done manually at Authorized Agent Banks until the revised form is uploaded.
6. Withholding agent role. Microfinance NGOs act as withholding agents when they have employees receiving compensation subject to withholding, or when they make payments subject to withholding at source.

Who is affected

• Microfinance NGOs accredited by the Microfinance NGO Regulatory Council