RR No. 06-2004: Implements the tax exemptions and privileges granted under RA No. 9182, otherwise known as the “Special Purpose Vehicle Act of 2002”

Key points

1. SPV registration. Every SPV registers once with the appropriate RDO on or before the start of business, with the SEC Certificate of Registration, Articles of Incorporation and By-Laws, and Mayor’s Permit. An SPV with a head office, branch or facility registers with the RDO having jurisdiction over it.
2. Annual registration fee. An SPV pays P500.00 for every separate establishment or place of business upon registration and every year after, on or before the last day of January. Payment goes to an Authorized Agent Bank in the RDO, the Revenue Collection Officer, or the authorized city or municipal Treasurer.
3. Invoicing and books. SPVs register each internal revenue tax they must file and pay, and update the registration for changes. They issue receipts or invoices for each sale or transfer and keep a journal and a ledger or their equivalents.
4. Exempt transactions. Twelve listed transfers and dations in payment of Non-Performing Loans and ROPOA are tax exempt, involving financial institutions, SPVs, borrowers, third parties and individuals. They are exempt from Documentary Stamp Tax, Capital Gains Tax, creditable withholding tax on ordinary-asset real property (not Income Tax under Title II), and VAT or Gross Receipts Tax, subject to Sections 7b and 7c of the Regulations.
5. Additional SPV and FI privileges. An SPV is exempt from Income Tax on net interest income from new rehabilitation loans, and DST applies to neither those loan documents nor capital infusion documents, for NPLs acquired from an FI within 2 years from March 19, 2003. These apply for not more than 5 years from the SPV’s acquisition of the borrower’s NPL. An FI’s loss from transferring its NPA to an SPV in that period is an ordinary loss carried over for 5 consecutive taxable years, with conditions on tax savings, mergers, and the 2% MCIT.
6. Proof and existing documents. An SPV claiming exemptions on other transactions gives the appropriate Certificate of Eligibility from the Regulatory Authority to the Commissioner or a representative on request. Existing qualifying documents go to the RDO within 30 days from effectivity, or late filing penalties apply.

Who is affected

• Special Purpose Vehicles
• Financial institutions transferring NPLs or ROPOA to SPVs
• Borrowers and third parties making dation in payment

Deadlines and effectivity

• Registration: on or before commencement of business
• Annual fee: on or before the last day of January
• Existing documents: within 30 days from effectivity
• Exemptions: not more than 5 years from the SPV’s acquisition of the NPL