RR No. 20-2002: Clarifies the tax treatment of income earned from unregistered activities by enterprises registered under the Bases Conversion and Development Act of 1992 and the Philippine Economic Zone Act of 1995

Key points

1. Registered activities. Income of an enterprise registered with the SBMA, CDA or PEZA from its registered activity or activities follows the tax treatment in its term of registration.
2. Unrelated income. Income not related to the registered activities is subject to regular internal revenue taxes. Examples are the 20% final Income Tax on interest from Philippine Currency bank deposits and on yield from deposit substitutes, trust funds and similar arrangements, the 7.5% tax on foreign currency deposits, and the 5%/10% Capital Gains Tax or ½ % stock transaction tax, as the case may be, on the sale of shares of stock.
3. Payments to the Customs Territory. Income payments by a registered enterprise to an entity in the Customs Territory do not get the enterprise’s preferential rates or exemption. Dividends to shareholders, interest to creditors and similar payments are taxed at the rate that applies to the recipient.

Who is affected

• Enterprises registered with SBMA, CDA or PEZA