Philippine Tax Rates for Financial Intermediaries

Non-Bank Financial Intermediaries

FINANCING COMPANIES
Tax/Transaction Rate Rule
30% based on net taxable
Regular Income Tax
income
Gross income of financing companies = gross receipts - returns, allowances, and
MCIT 2% of gross income cost of service; the general rules on MCIT of banks apply to financing companies as
well.
The general rules on withholding tax (both with respect to its withholding tax
Withholding Taxes obligations and the withholding required on its income) apply to financing
companies as well.
* CWT (if the payor is a
2%
TTC)
IAET Exempt Sec. 29, NIRC
Gross Receipts Tax
(i) Lending Income - on 5% If the remaining maturity period is five years or less.
interest, commissions, and 1% If the remaining maturity period is more than five years.
(ii) Non-lending income -
on income from interest,
commissions, discounts, 5%
and all other ites treated as
gross income
(iii) Financing companies
7% Applies to income derived from activities other than lending and finance leasing
with QB functions
The same rates of DST on documents and transactions entered into by banks apply
DST
to financing companies, as well as its exemptions.
FINANCE LEASING COMPANIES
Income Tax (Regular income
subject to the same rules on income taxation like other financing companies.
tax, MCIT, FT, CWT)
The income received from leasing the property, undiminished by the amount
Taxable income under a
representing the return of capital, is includible in the gross taxable income of the
finance lease arrangement
lessor.

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 Philippine Tax Rates for Financial Intermediaries
Withholding Taxes
Lease payment made by a
lessee for the continued use
or possession of personal
5% CWT on the gross rental or
property used in business
lease
for which he has not taken
title, or in which he has no
equity
Lease payment under a
financial lease arrangement While payments made under a finance lease arrangement may be claimed as a
Exempt from the 5% CWT for
with a leasing arrangement deductible expense from the taxable income of the lessee, such is not subject to
renatals of personal property
with a leasing and finance CWT on rentals of property.
company authorized to
operate under RA 8556
1% CWT Applicable to purchases of goods if the lessee is a TTC.
Gross Receipts Tax
Subject to the GRT applicable to financing companies in general
Finance-Lease Income In computing the taxable gross receipts subject to GRT, only the interest income or
the interest component of the lease payment shall be included
Portion of the rental or
periodic payment that
pertains to the recovery of
Not a taxable receipt subject to GRT.
the principal or
amortization for the cost of
the property being leased
Rental income received by a
finance leasing company
subject to GRT for the full amount without deduction.
from an operating lease
arrangement
Computation of Interest
Component (RR 19-86)
Interest Income is recognized based on the outstanding principal balance of the loan or financial lease.
a. Annuity Method
Outstanding principal balance of lease facility X Lease rate factor = Lease income for a specific period

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 Philippine Tax Rates for Financial Intermediaries
Interest income is recognes based on the outstanding pricinipal balance of the loan or financial lease.
b. Sum-of-the-years-digits (No. of remaining period payments / SYD) X = Total lease income = Lease income for a specific period
SYD = ( N(N +1) ) / 2 ,where N represents the number of period payments.
12% VAT Imposed on the rental income derived from the lease arrangement (RR 19-86)
Finance leasing income of a
non-financing company Imposed on the rental income , if the annual gross receipts do not exceed P1.5
3% percentage tax
Million
P1 for every P200, or a fraction
DST thereof of the face value of the
lease.
Operating Lease
The lease payments actually earned plus the rental payments received in advance,
if any, shall be reported as income by the lessor in the year of receipt (BIR Ruling
Nos. 3-00;259-91; DA 509-06)
Income Tax
As the owner of the leased property, the lessor claims as deduction from its
taxable income the depreciation of the preoprty leased while the lessee claims the
rental payments as a deduction from its taxable income.
GRT
Rental income received
by a finance leasing
company from an 5%
operating lease
arrangement
Rental income received
7%
by a bank or quasi-bank
Rental income received
by an entity other than a 12% VAT
financial intermediary
Withholding Taxes
Rental Payment under
5% CWT (Sec. 2.57.2 ( C ) (2), RR-98)
an operating lease

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 Philippine Tax Rates for Financial Intermediaries
CREDIT CARD COMPANIES
Subject to taxes as a financing company. The interest income, discount revenue,
Income Tax (Regular income
and other fees earned from its operations are subject to the same taxes imposed
tax, MCIT, FT, CWT)
on financing companies in general.
Withholding Taxes
On Income Received:
Interest income and other fees earned by card companies from its issuing business,
If paid by a TTC 2% CWT that is, from financing the purchases of cardholders is not subject to any CWT,
unless the cardholder is a BIR-designated TTC.
On Income Payments:
Gross payments to
merchants representing
the sales of goods and
1/2 of 1% CWT Card companies are to withhold such CWT as a speciall rule
services made by these
business entities to the
cardholders
On Purchases by
Cardholders
Taxpayers belonging to the top 20,000 private corporaations, large taxpayers,
Purchases made by TTC government offices are not required to withhold the tax on their purchase of goods
and services if payment is made through a credit card.
GRT subject to the same rules as that of a financing company
card companies are subject to DST on documents they issue and on transactions
DST
they enter into that are subject to DST.
1. All forebearances arising from sales or service contracts, including credit card
and trade receivables, but the exemptions is limited only to those executed by the
seller or service provider itself.
Transactions exempt from
2. Assignment or transfer of any contract or any evidence of obligation or
DST
indebtedness, if there is no change in the maturity date or remaining period of
coverage. The transfer or assignment of the merchange receivables to the card
company upon discounting is NOT subject to DST.

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 Philippine Tax Rates for Financial Intermediaries
SPECIAL PURPOSE VEHICLE (SPV)
An SPV is a nonbank financial institution performing activities similar to a financing company. Its main activity is to invest in and acquire loans,
receivables, and other evidence of indebtedness. Its income and transaction are subject to the same taxes imposed on financing companies.
GOVERNMENT FINANCING INSTITUTIONS
Home Development Mutual
Subject to all taxes applicable to a financing company.
Funds
Considered habitually engaged in the real estate business ; acquired assets are
30% based on net taxable
Sale of foreclosed assets to ordinary assets of the HDMF, therefore subject to withholding tax rates applicable
income
its members to entities habitually engaged in the real estate business (BIR Ruling No. DA-209-02,
Nov. 15, 2002)
12 % VAT
Home Guaranty Corporation
Interests and yields earned
or accumulated on
mortgage, debentures,
bonds, notes, mortgage and
assset-backed securities,
Exempt from all taxes to the
interests under lease and
extent of the weighted average
other credit instruments,
interest rate of 10.15%
whether issued by the HGC
or covered by its guaranty
in favor of natural and
juridical persons, in cash or
in bonds
Exempt from income tax to the
Discounts earned from HGC Any excess is subject to income tax, either to the 20% FWT if it qualifies as a
extent of an average of 10.15%
zero-coupn bonds deposit substitute, or regular income tax (BIR Ruling No. 026-02, June 27, 2002)
interest rate
INVESTMENT COMPANY
30% based on net taxable Except on income already subjected to final tax. Also subject to MCIT, withholding
Income Tax
income taxes.

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 Philippine Tax Rates for Financial Intermediaries
Final Tax
Interest income from
currency bank deposits and
yield or other monetary
benefit from deposit 20%
substitutes and from trust
funds and similar
arrangements
Interest income from
foreign currency deposit
7.50%
with a depository bank
under EFCDS
Cash and property dividend
received from a domestic 0%
corporation
Sale of shares listed and
traded through the stock 1/2 of 1% stock transaction tax
exchange
On the sale of shares of
5% on the first 100,000 of net
stocks not listed and traded
gain and 10% in excess thereof
through the stock exchange
Mutual Fund
Contribution to Collective
Not deductible from taxable income of contributor/shareholder
Investment Scheme
Issuance of original shares of DST - P1 per 200 of par value of
mutual fund original issuance of shares
Subject to a final tax depending on the nature of the investment income. Income
Income of the fund from
not subject to a final tax is taxable to the investment company as ordinary income
investments
subject to 30% RCIT unless it is exempt under certain laws.

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 Philippine Tax Rates for Financial Intermediaries
Distribution of the income to
investors
Dividends
Redemption Gains
Unit Investment Trust Funds (UITF)
Contribution to Collective
Investment Scheme
Issuance of certificate of units
of participation in UITF
Income of the fund from
investments
Distribution of the income to
investors
Variable Unit Link
Contribution to Collective
Investment Scheme
Issuance of insurance policy
with VUL
Income of the fund from
investments
10% FT Individual citizen/Resident alien
20% Non-resident alien engaged in trade or business
25% Non-resident alien not engaged in trade or business
30% or tax treaty Non-resident foreign corporations
Exempt Dividends distributed to resident corporate investors
Excluded from gross income and is consequently exempt from income tax pursuant
Exempt/Exclude
to Sec. 32 (B)(7)(h), NIRC.
Not deductible from taxable income of contributor/shareholder
DST - P15 per certificate of units
of participation. (Sec. 188, NIRC)
Subject to a final tax depending on the nature of the investment income. Income
not subject to a final tax is taxable to the investment company as ordinary income
subject to 30% RCIT unless it is exempt under certain laws.
Exempt Distribution of income of the UITF/trust to the investor/trustor
Not deductible from taxable income of contributor/shareholder
DST - P0.50 per P200.00 of
the amount of premium
(Sec. 183, NIRC; RMC 59-2008 and 49-2010)
collected, including the
contributions to the fund
Subject to a final tax depending on the nature of the investment income. Income
not subject to a final tax is taxable to the investment company as ordinary income
subject to 30% RCIT unless it is exempt under certain laws.
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 Philippine Tax Rates for Financial Intermediaries
Gains realized by the policyholder from redemption of units of shares in the VUL
Distribution of the income to
are taxable to the policyholder/invest or as ordinary income subject to regular
investors
individual income tax (RMC 30-08 as amended by RMC 59-08 and 49-2010)
INVESTMENT HOUSE
Income Tax (Regular income
subject by the same tax rules as those imposed on other financial intermediaries.
tax, MCIT, FT, CWT)
RCIT 30%
Investment house with QB subject to taxation rules applicable to banks and other nonbank financial
functions intermediaries/institutions (NBFIs) with QB functions
IAET Exempt
GRT
5% If the remaining maturity period is five years or less.
* Investment house with QB
functions 1% If the remaining maturity period is more than five years.
7% Non-lending income
* Investment house without
5%
QB functions
same rate of DST as those imposed on banks and other NBFIs ; applicable even on
documents in electronic form; the issuance of electronic documents, which are the
DST
functional equivalent of written docuemtns, is tantamount to the issuance of
written documents (Sec. 10, RR 13-04)
SECURITIES BROKERS AND DEALERS
30% based on net taxable Subject to the same manner as other entities engaged in business as a seller of
Income Tax
income service.
IAET 10%
Sale, barter, or exchange of shares of stock listed and traded through the local
Stock Transaction Tax Exempt
stock exchange by a dealer is not subject to a STT
imposed on the total gross receipts; only when the sale of shares of stock was sold
VAT 12%
by a dealer of securities.
A dealer in securities is subject to the same DST with respect to its own
DST
transactions or taxable documents issued by it.

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 Philippine Tax Rates for Financial Intermediaries
Taxation of Sale, Barter, Exchange, or Other Disposition of Shares of Stock held as Capital Assets
Capital Gains Tax
Stock Transaction Tax
Initial Public Offering Tax (IPO)
DST
Securities Borrowing and
Lending Transactions
5% on the first 100,000 of net
gain and 10% in excess thereof
1/2 of 1%
4% if the proportion is 25% or
less
2% if 25% up to 33 1/3%
1% if over 33 1/3%
Exempt
P1 per 200 of par value of
original issuance of shares
Exempt from DST, STT, and CGT
Imposed on the net capital gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of stock in a domestic corporation,
EXCEPT on listed and traded shares sold or disposed of through the stock exchange
Due on every sale, barter, exchange, or disposition of shares of stock listed and
traded through the local stock exchange by a person other than a dealer in
securities.
Every sale, barter, exchange or disposition through IPO of shares of stock in closely
held corporations is subject to IPO tax based on the gross selling price or gross
value in money of the shares of stock sold, bartered, exchanged, or otherwised
disposed.
The rate is based on the proportion of shasres of stock sold, bartered, exchanged,
or otherwise disposed of to the total outstanding shares of stock after the listing in
the local stock exchange.
The sale, barter, exchange, or disposition of shares of stock listed and traded
through the local stock exchange (RA 9243; RA 9648)
The borrowing and lending of securities agreement executed under the Securities
Borrowing and Lending Program of a registered exchange, or in accordance with
regulations prescribed by the appropriate regulatory agency
The trading of fixed income and other securities in the secondary market or
through an exchange
Involves the lending of shares of stock or securities by the lender, who owns or
controls them, to the borrower who needs the sahres of stocks/securities
borrowed to support trading strategies or settlement obligations, in exchange for a
collateral and the promise to return teh equivalent shares of stock/securities at teh
end of the borrowing period which cannot be more than 2 years.
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 Philippine Tax Rates for Financial Intermediaries
Entered into between financial institutions and between financial institutions and
Cash-Settled Securities Swap the BSP, to simultaneously buy or sell governmeent securities spot and sell or buy
Exempt from DST
Transactions comparable securities at a pre-determined future date and price with the same
counter-party (RMC 62-03)
PDex Repo Program BIR Ruling No. 16-2010, June 29, 2010
* Interest Income 20% FWT Income from the repurchase transaction
The repo transaction being a loan, the income dervied therefrom is an interest
* GRT 5% income and not capital gains. Considering that the repo transaction si with a tenor
of not more than 3 months, the GRT applicable is 5%.
Exempt Repurchase transaction
P20, when the amout does not
exceed P5,000 The transfer of collateral securities from the rep seller/cash borrower to the repo
* DST
Additional P10, on each P5,000 buyer/cash lender shall not be subject to CGT but subject to DST as pledge under
or fractional part thereof in Section 195, NIRC.
excess of P5,000
PHILIPPINE STOCK EXCHANGE
Gains realized from the sale of a membership seat is part of the seller's gross
Membership seat in the PSE 30% based on net income
income subject to regular income tax (BIR Rulig Nos. 151-98 and 349-87)
OTHER NON-BANK FINANCIAL INTERMEDIARIES
Pawnshops
Income Tax (Regular income subject to the same taxes as that of other NBFIs; 30% RCIT if corporation, 5-32% if
tax, MCIT, FT, CWT) sole proprietorship
IAET Exempt
5% If the remaining maturity period is five years or less.
GRT 1% If the remaining maturity period is more than five years.
(RR 10-04)
P20, when the amout does not
exceed P5,000
DST Additional P10, on each P5,000 Sec. 195, NIRC
or fractional part thereof in
excess of P5,000
Money Changers or Foreign Exchange Dealers
30% RCIT
Income Tax
5 - 32% individual income tax If sole proprietorship

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 Philippine Tax Rates for Financial Intermediaries
Gross receipts from commissions, fees, net gains from foreign currency trading and
GRT 5%
other items of income
Lending Investors
Must be established as a corporation only; not classified as financial intermediaries
Income Tax 30% RCIT
for taxation purposes
MCIT 2%
IAET 10%
VAT 12%
Nonstock savings and loan associations (NSSLAs) and Building and loan association (BLAs)
NSSLA
Includes the 20% final tax imposed on interest income
* Income Tax Exempt
Includes the interest earnings of its members
any income dervied from any of NSSLA's properties, real or personal, or any activity
Subject to income tax conducted for profit, regardless of the dispostion thereof, is subject to income tax.
(RA 8367)
*Income from properties Exempt from income tax, CGT, Sale of foreclosed properties used as collaterals to secure the loans of the
withholding taxes; subject to DST members
6% FT on the basis of the gross Sale of foreclosed properties not actually used in the conduct of the association's
selling price or FMV business
Sale of shares listed and
traded through the stock 1/2 of 1% stock transaction tax
exchange
On the sale of shares of
5% on the first 100,000 of net
stocks not listed and traded
gain and 10% in excess thereof
through the stock exchange
BLA
* Income Tax Exempt Includes the 20% final tax imposed on interest income
Exempt from all taxes including
* BLAs guaranteed by the those imposed on its franchises,
HGC capital, reserves, surplus, and its
loans, receipts, and incomes.

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 Philippine Tax Rates for Financial Intermediaries
5% If the remaining maturity period is five years or less.
* GRT
1% If the remaining maturity period is more than five years.
Trust Companies
Income Tax (Regular income
subject to the same provisions as those of NBFIs
tax, MCIT, FT, CWT)
Any distribution of the income
of a trust and any return of the Not taxable transaction subject
fund to the trustor by the to tax
trustee
Venture Capital Corporations
The business operations of a venture capital company shall be taxed in the same manner as other NBFIs.

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