THE BUREAU OF Internal Revenue (BIR) has clarified that the Bangko Sentral ng Pilipinas’ (BSP) tax exemption only applies to the income generated from its governmental functions, as the rest of its earnings are considered proprietary income.
The BIR issued Revenue Memorandum Circular (RMC) No. 14-2020 dated Feb. 24, distinguishing BSP’s income derived from its governmental functions from those considered as proprietary income.
“All other income not considered as derived from its governmental functions shall be considered as proprietary income and shall be subject to all national internal revenue taxes,” the memorandum signed by BIR Commissioner Caesar R. Dulay read.
Last month, the bureau issued Revenue Regulations No. 2-2020, effectively implementing Republic Act. (RA) No. 11211 that exempts the central bank from all national internal revenue taxes on its governmental functions.
The latest circular also clarified that the tax privileges provided under the law already took effect on March 6 last year, which was the 15th day after RA No. 11211 was first published on Feb. 19, 2019.
According to the latest issuance, the central bank is exempted from 12% value-added tax “as provided under RMC No. 65-2008” while its transactions are exempted from documentary stamp taxes.
On income tax exemption, the kind of earnings included are revenues generated from interests, sale of its own and acquired properties interests, fees and commissions, penalties it receives from financial institutions or from the gains on its trading activities and the premiums it receives.
Also, those considered as miscellaneous income like those earned from demonetization of currency, recovery of asset accounts with valuation reserves, dividend income, teller’s overages, premiums on foreign exchange currency shipment, among others, are all exempted from income taxes.
Meanwhile, the BIR said the BSP’s proprietary income are subject to income taxes, such as the revenue that the central bank earns from the sale of printed securities, BSP forms, scrap items, commemorative medals, commemorative medals; demonetized commemorative notes and coins, shredded records, car and security passes and its scrap materials.
Other taxable income are those derived from parking fees as well as rental of vault space and BSP-owned and acquired properties. — Beatrice M. Laforga