Law Summary
Issuance of Additional Taxpayer Identification Number (TIN) for FCDUs
- Bureau of Internal Revenue (BIR) to issue a new, separate TIN for FCDUs in depository banks.
- Existing TIN remains valid for RBU-related tax transactions.
- Banks with FCDUs will possess two TINs: one for RBU income, one for FCDU income.
- BIR’s Large Taxpayers Assistance Division I will automatically issue additional TINs without application.
- Notification of additional TINs given on or before April 15, 2002.
Procedures for Filing Returns and Payment of Taxes for FCDU Income
- Returns for FCDU income filed separately from RBU income returns.
- Returns due within 60 days after the end of each quarter.
- Use BIR Form 1702Q for quarterly filing.
- Apply final 10% tax rate for foreign currency transactions under Sections 27(D)(3) and 28(A)(7)(b).
- Other FCDU income not classifiable as onshore/offshore taxed at the regular income tax rate (32% or 2%).
- Two separate income tax returns filed by banks with FCDUs each taxable year: one for FCDU income, one for RBU income.
- Interest income from foreign currency loans to residents subjected to 10% withholding tax; withholding agent (borrower) remits tax to BIR.
- FCDUs must report such interest income in their income tax return for information only.
- Supporting documents such as withholding tax returns, official receipts, and certificates of final tax withheld must be submitted with FCDU tax returns.
- Annual consolidated FCDU income tax return (BIR Form 1702) to be filed on or before the 15th day of the 4th month after taxable year ends.
- Tax payments on annual returns adjusted for quarterly payments made.
- Attach detailed statement of onshore and offshore income as required by Section 6 of Revenue Regulations 10-76.
- Income subject to 10% tax to be reported under "Special Rate Column"; other income under "Regular Rate Column" on BIR Forms.
Recordkeeping Requirements for FCDUs
- FCDUs must keep separate and independent books of accounts from RBU transactions.
- Records must be maintained at the principal place of business.
- Records and supporting data used in preparing tax returns must be readily available for BIR inspection.
- Compliance facilitates accurate tax reporting and audit processes.
General Implementation and Enforcement
- Internal Revenue officers and concerned parties directed to widely disseminate this Circular.
- Circular aims to resolve filing issues in Integrated Tax System related to banks with FCDUs.
- Promotes clarity in tax compliance and enforcement related to FCDU income.