RR No. 6-2010: Prescribes the policies, guidelines and procedures in the implementation of the Tax Subsidy granted under Section 17 (c) of RA No. 3591 (Philippine Deposit Insurance Corporation [PDIC] Charter)

Summary

RR No. 6-2010 sets the policies, guidelines and procedures for the tax subsidy granted to the Philippine Deposit Insurance Corporation (PDIC) under Section 17 (c) of RA No. 3591, as amended by RA No. 9576.

Key points

1. Taxes covered by the subsidy. For June 1, 2009 to May 31, 2014, the subsidy covers PDIC’s own tax obligations. It excludes taxes passed on to clients (Capital Gains Tax and Documentary Stamp Tax) and trust fund taxes PDIC withholds (Expanded Withholding Tax, Final Withholding Tax and Withholding Tax on Compensation).
2. Exemption from June 1, 2014. From June 1, 2014 onwards, PDIC is exempt from Income Tax, Final Withholding Tax on income payments to PDIC, and Value-Added Tax on assessments collected from member banks.
3. CES and SARO process. PDIC requests a Certificate of Entitlement to Subsidy (CES) from the Fiscal Incentives Review Board (FIRB). The Department of Budget and Management (DBM) then issues a Special Allotment Release Order (SARO) in favor of the Bureau of Treasury (BTr) to cover the taxes payable to the BIR.
4. Payment and withholding rules. Income and Value-Added Taxes are filed on their due dates and paid through the Tax Expenditure Fund. Where BTr is the payor, it does not withhold FWT on income payments to PDIC and releases 80% on coupon or purchase value dates, with the remaining 20% released upon the DBM’s SARO for the FWT due. Other withholding agents withhold and remit as usual and give PDIC a certified copy of BIR Form No. 1601-F and the Monthly Alphalist of Payees.
5. Penalties and refunds. Late payment penalties do not apply when the delay comes from FIRB or DBM, provided PDIC applied for the CES and SARO within the set periods. If PDIC’s neglect causes the delay, penalties apply. Cash refund claims of excess withheld taxes are processed by the BIR within 120 days from issuance of a Letter of Authority.
6. Withholding stops from June 1, 2014. Income payments to PDIC are no longer subject to withholding tax under Section 2.57.5 (B) of RR No. 2-98, as amended. The BTr, other government bodies and private entities including banks remit the full amount of PDIC’s income and receivables.

Who is affected

• Philippine Deposit Insurance Corporation (PDIC)
• Withholding agents making income payments to PDIC
• Bureau of Treasury
• Fiscal Incentives Review Board and Department of Budget and Management

Deadlines and effectivity

• Subsidy period: June 1, 2009 to May 31, 2014
• Exemption: from June 1, 2014 onwards
• Withholding taxes due on the 10th day of the following month

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.