Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 18-2011)
Interest income earnings from long-term deposits or investment certificates are exempt from income tax under the specified provisions.
The minimum maturity period is five (5) years.
The depositor or investor must be an individual citizen (resident or non-resident), a resident alien, or a nonresident alien engaged in trade or business in the Philippines; corporations are not qualified.
The denominations must be at least Ten thousand pesos (P10,000) or other denominations as prescribed by the Bangko Sentral ng Pilipinas (BSP).
If pre-terminated before the fifth year, a final tax is imposed on the entire income based on remaining maturity: 5% for 4 to less than 5 years; 12% for 3 to less than 4 years; and 20% for less than 3 years.
Forms include savings, common or individual trust funds, deposit substitutes, investment management accounts, and other investments evidenced by certificates prescribed by BSP.
No, the exemption covers only the interest income; gains from trading or foreign exchange gains are not covered.
No, the deposits or certificates must be under the name of the individual depositor or investor, not under the bank or trust department/unit.
No, only individuals as specified are covered; corporations are excluded.
The exemption is provided under Sections 24(B)(1) and 25(A)(2) of the National Internal Revenue Code of 1997, as amended.
The depository bank is responsible for deducting and withholding the final tax from the proceeds based on the remaining maturity period.
Yes, all rulings and issuances inconsistent with this Circular are considered void and have no legal effect for being contrary to law.