Finance Secretary Carlos Dominguez and Internal Revenue Commissioner Caesar Dulay signed Revenue Regulation 2-2020, dated Jan. 15, implementing the tax exemption provisions of Republic Act 11211, otherwise known as the New Central Bank Act.
PPD/King Rodriguez, File
BIR exempts BSP from income taxes
Mary Grace Padin (The Philippine Star) - January 18, 2020 - 12:00am

MANILA, Philippines — The Bureau of Internal Revenue (BIR) is now exempting the Bangko Sentral ng Pilipinas (BSP) from paying taxes on income derived from its governmental functions.

Finance Secretary Carlos Dominguez and Internal Revenue Commissioner Caesar Dulay signed Revenue Regulation 2-2020, dated Jan. 15, implementing the tax exemption provisions of Republic Act 11211, otherwise known as the New Central Bank Act.

“The BSP shall be exempt from all national internal revenue taxes on income derived from its governmental functions,” the regulations read.

These include income from activities done in the exercise of the central bank’s regulation and supervision over banks, non-bank financial institutions performing quasi-banking functions, money service businesses, credit granting businesses and payment system operators.

Also exempted are income from transactions in pursuit of the BSP’s primary objective to maintain price stability conducive to a balanced and sustainable growth of the economy, the promotion and maintenance of monetary and financial stability, and the convertibility of the peso.

Dulay said all other incomes not included in the RR shall be considered as proprietary income and shall be subject to all applicable national internal revenue taxes.

The regulations will become effective 15 days from its publication in the Official Gazette or in a newspaper of general circulation.

The New Central Bank Act was signed by President Duterte on Feb. 14 last year to amend the BSP’s old charter, as contained in RA 7653.

Under the amended Section 125 of the law, the Bangko Sentral shall be exempt from all national, provincial, municipal and city taxes on income derived from its governmental functions.

According to the latest data, the BSP was able to book a net income of P40.24 billion from January to November 2019, 5.74 percent down from P42.69 billion in the same period in 2018.

The central bank’s revenues for the period – mostly comprised of interest income on foreign investments, government securities and treasury bonds – jumped almost two times to P113.43 billion from P61.35 billion in the same period of the previous year.

On the other hand, the BSP’s operating expenses increased by 33 percent to P75.50 billion from P56.28 billion in the same 11-month period in the previous year.

Net gains from foreign exchange rate fluctuations as of end-November slumped by 72.59 percent to P14.46 billion as compared to the end-November 2018 level of P52.76 billion.

The BSP said it also settled P12.16 billion in income taxes during the January to November 2019 period, 19.68 percent lower than P15.14 billion in the same period of 2018.      

BIR CAESAR DULAY CARLOS DOMINGUEZ
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