WITHHOLDING OF PERCENTAGE TAX – GROSS RECEIPT TAX (GRT)

Adopted: 25 July 2014
Date Filed: 01 August 2014

Under Revenue Regulations No. 02-98, the Bangko Sentral ng
Pilipinas (BSP) is required to deduct and withhold the percentage taxes,
GRT due from its payments to all banks and non-bank financial
institutions with quasi-banking functions, to quote as follows:

“xxx

SECTION 5.116. Withholding of Percentage Tax –

Bureaus, offices and instrumentalities of the government,
including government-owned or controlled corporations as well as their
subsidiaries, provinces, cities and municipalities making any money
payment to private individuals, corporations, partnerships and/or
associations are required to deduct and withhold the taxes due from the
payees on account of such money payments.

(A) Internal revenue taxes required to be withheld. – Percentage
taxes on gross money payments, to the following shall be subjected to
withholding at the rates herein prescribed:

XXX

(5) Banks and non-bank financial intermediaries –

(a) On interest, commissions and discounts paid or given to
banks and non-bank financial intermediaries arising out of lending
activities as well as financial leasing, on the basis of the remaining
maturities of the instrument –

Short-term maturity (not exceeding 2 years) – 5%
Medium-term maturity (over 2 year but not exceeding 4 years) – 3%
Long-term maturity:
(i) over 4 years but not exceeding 7 years – 1%
(ii) over 7 years – 0%

(b) On dividends – 0%

(c) On royalties, rentals of property, real or personal, profits from exchange and all other gross income – Five percent (5%)”

In light of the above, BSP shall withhold the applicable percentage tax, i.e. gross receipts tax, from ALL
payments to banks and non-bank financial institutions with quasi
banking functions, such as, but not limited to, interest payments
pertaining to the following: Special Deposit Account (SDA) – Regular,
Special Deposit Account (SDA)-Trust, Government Securities Sold under
Agreements to Repurchase (RRP) and Reserve Deposit Liquidity Account
(RDLA) on accrual basis effective 1 August 2014.

The withholding and the subsequent remittance of taxes withheld
shall be without prejudice to available remedies to the BSP and the bank
or quasi-bank concerned after final resolution of the issues relating
to withholding of the GRT.

FOR THE MONETARY BOARD

(SGD) VICENTE S. AQUINO
Officer-in-Charge