RR No. 10-2024: Amending certain provisions of Revenue Regulations No. 10-2006, as Amended, relative to the registration of Master Securities Lending Agreement and Global Master Securities Lending Agreement

Key points

1. Definitions and parties. Collateral may be cash, government securities, equity securities, a bank standby letter of credit or other collateral. A GMSLA is an MSLA substantially in the form published by the International Securities Lending Association, and MSLA references include GMSLA. A Lender may be any natural or juridical person, including a foreign lender, subject only to SEC and PSE regulations.
2. Tax treatment of SBL. Securities borrowing and lending of PSE-listed shares, with the delivery and return of collateral or equivalent shares, is not subject to stock transaction tax under Section 127, to capital gains tax under the listed sections, or to documentary stamp tax under Section 175. This applies if a valid MSLA is registered with and approved by the BIR, and the SBL program follows SEC rules and is supervised by the PSE. Other applicable taxes continue to apply.
3. Multilateral MSLA. A Lender/Lending Agent with multiple borrowers may register one Multilateral MSLA with the BIR. Borrowers are added through an Accession Agreement, which requires payment of registration fees, after which the BIR issues a new certificate of registration.
4. Registration. Registration is filed with the Legal and Legislative Division of the BIR National Office, with three copies each of the Registration Form, the signed MSLA pre-cleared by PSE, and the Lender’s Notification. It is made within two (2) weeks from execution in the Philippines, or within one (1) month from authentication or apostille if executed abroad. The Division acts within five (5) working days from complete submission, and registration is valid until revoked.
5. SBL deemed a sale. An SBL is deemed a sale and purchase when borrowed shares are not returned in whole or in part at the end of the borrowing period. Partial return is allowed, and the unreturned balance is deemed bought by the Borrower and sold by the Lender.
6. Compliance and information sharing. The Borrower gives PSE a copy of the BIR-stamped MSLA within fifteen (15) days from submission to the BIR. Under new Section 14, PSE gives authorized BIR representatives access to SBL reports, and the BIR gives PSE a list of MSLAs registered in a quarter within fifteen (15) calendar days after the quarter ends.

Who is affected

• Lenders, Borrowers and Lending Agents in securities borrowing and lending
• Parties to an MSLA, Multilateral MSLA or GMSLA

Deadlines and effectivity

• Registration within two (2) weeks from execution in the Philippines
• Registration within one (1) month from authentication or apostille if executed abroad
• BIR action within five (5) working days from complete submission