Summary
RMC No. 16-2003 defines the term Certificate of Deposit to clarify its taxability.
Key points
- Essential elements. The bank receives money for deposit and acknowledges it by a written document. The bank promises to pay the depositor, bearer or another person or order on maturity, and imposes an early withdrawal penalty in the form of reduced interest.
- Distinct features. These are a minimum deposit requirement, a stated maturity period, and an interest rate higher than an ordinary savings account. It is not payable on sight or demand, but on maturity or after prior notice on pre-termination, and early withdrawal means partial or total loss of interest.
- Documentary Stamp Tax. A written instrument that meets these elements and features is considered a Certificate of Deposit, for which Documentary Stamp Tax is imposed.
Who is affected
- Banks issuing written instruments that may qualify as Certificates of Deposit
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
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