Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 8-2008)
The regulation clarifies that transactions of the Bangko Sentral ng Pilipinas (BSP) performed under its governmental and regulatory authority are excluded from the gross receipts tax (GRT) coverage imposed on banks and non-bank financial intermediaries under Sections 121 and 122 of the National Internal Revenue Code.
GRT is a business tax imposed on persons or entities doing business in the Philippines, calculated as a percentage tax on income received by a business without deductions for costs of doing business, specifically imposed on banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries.
Banks or banking institutions refer to entities engaged in lending funds obtained as deposits, including universal banks, commercial banks, thrift banks, cooperative banks, rural banks, Islamic banks, and others as defined under Republic Act No. 8791 (General Banking Law of 2000).
Non-bank financial intermediaries are entities whose principal function includes lending, investing, or placement of funds or evidences of indebtedness or equity deposited with or acquired by them, including those issuing or endorsing debt instruments or certificates to obtain funds from the public.
Quasi-banking functions involve borrowing funds from twenty or more lenders by issuing, endorsing, or accepting debt instruments other than deposits for relending or purchasing receivables, excluding commercial, industrial, or non-financial companies borrowing for their own operational needs.
Because BSP performs governmental functions as the independent central monetary authority and its transactions are in pursuit of its constitutional and statutory mandates, not commercial activities. Applying GRT would impede BSP's ability to implement monetary policies and perform its legally mandated functions.
Article XII, Section 20 of the 1987 Constitution and Republic Act No. 7653 empower BSP to provide policy direction in money, banking, and credit; supervise banks and finance companies; maintain monetary stability; and promote price stability and the convertibility of the peso.
Section 5 states that the income or revenue realized by BSP from transactions undertaken in the pursuit of its legally-mandated functions is excluded from the GRT imposed under Sections 121 and 122 of the National Internal Revenue Code.
According to the separability clause in Section 6, if any provision is held unconstitutional or invalid, all other unaffected provisions shall remain valid and in full effect.
These regulations took effect fifteen (15) days following publication in a newspaper of general circulation as stated in Section 8.