RMC No. 125-2024: Amending certain provisions of Revenue Memorandum Circular No. 095-2017, Providing Guidelines on the Tax Treatment of the Government Securities Repurchase Transactions Governed by the Global Master Repurchase Agreement

Key points

1. Coverage (Section 2). The GS Repo Program creates an Interdealer Government Bond Repo Market. Counterparties are Covered Entities such as Government Eligible Securities Dealers, Non-Bank Financial Institutions, Government Financial Institutions and other non-bank intermediaries. Eligible securities are Philippine Peso-denominated Treasury Bills and Treasury Bonds issued by the BTr, and the SEC authorizes a Self-Regulatory Organization for the participants.
2. General requirements (Section 3). Participants follow SEC, BSP and Insurance Commission regulations and the BAP and MART Operating Guidelines. They waive secrecy on government securities investments under RA 1405 in relation to their Repo transactions. Each enters a GMRA with its counterparty and executes an undertaking to adhere to the GMRA before any Repo.
3. Registration (Section 4). Before any Repo, participants file signed GMRAs and undertakings with the Scripless Securities Registry Division (SSRD) of the BTr. They then send the SSRD-stamped copies to the concerned BIR Revenue District Office or Large Taxpayer District Office.
4. Annual report (Section 5). Within thirty (30) days after the close of the taxable year, participants file a soft copy annual report in the Annex A format with the concerned RDO, or with the LTS through RLTAD 2 for large taxpayers. It summarizes all Repo transactions and covers details such as securities, principal, parties, dates, prices, Repo rate, interest income, and gains or losses on subsequent sale.
5. BTr records and copies of reports. On LTS request, accompanied by copies of the audit or assessment notices served, the BTr provides records relevant to the taxation of the Repo transactions of an entity under audit. Participants also furnish the BIR soft copies of reports on Repo transactions that existing rules require them to submit to the BSP or SEC.

Who is affected

• Government Eligible Securities Dealers, Non-Bank Financial Institutions, Government Financial Institutions and other Covered Entities in the GS Repo Program
• Bureau of the Treasury

Deadlines and effectivity

• Annual report within thirty (30) days after the close of the taxable year