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I
Scope and Objectives
In the case of Commissioner of Internal Revenue vs. The Hon. Court of Appeals, the Court of Tax Appeals, and the GCL Retirement Plan represented by its Trustee-Director, G.R. No. 95022, promulgated March 23, 1992, the Supreme Court ruled that GCL Retirement Plan, an employees' trust maintained by the employer, GCL Inc., is exempt from the 15% (now 20%, effective August 1, 1986) final withholding tax on interest income from money market placements and purchase of treasury bills. Because of the adverse decision of the court, it is anticipated that numerous claims for tax credit/refund of said tax would be filed with the Bureau of Internal Revenue (BIR).

In order, therefore, to have an expeditious and uniform system of processing written claims for refund or tax credit of the 20% final withholding tax imposed under Section 21(c)(1) in relation to Section 50(a), both of the Tax Code on interest income from Philippine currency bank deposits and on yield or any other monetary benefits from deposit substitutes, trust funds and similar arrangements which were paid to and received only by BIR - approved trusteed private employees' retirement benefit plans or employees' trusts, the following guidelines are hereby prescribed:

II
Who are entitled to the Refund or Tax Credit
Only a BIR-approved employees' trust/trusteed private employees' retirement benefit Plan duly registered with or accredited by the BIR as a reasonable private benefit plan as envisaged by Republic Act No. 4917, now Section 28(b)(7)(A) of the Tax Code as amended, shall be entitled to exemption from, and consequently, to the refund or tax credit of the 20% final withholding tax on interest income from Philippine currency bank deposits and on yield or any other monetary benefit from deposit substitutes, trust funds and similar arrangements.

On the other hand, income or earnings from investments of non-trusteed/insured plans are subject to income tax.  Hence, Deferred Annuity/Deposit administration funds shall remain subject to the 20% final withholding tax on interest income from Philippine currency bank deposits, and on yield/interest income from deposit substitutes, such as, money market placements, treasury bills, etc.

For purposes of this Order, a trusteed private employees' retirement plan is a BIR-approved reasonable retirement benefit plan for employees of private employers, whether individual or corporate, within the contemplation of Republic Act No. 4917 (now Section 28(b)(7) (A) of the Tax Code) as amplified by Revenue Regulations No. 1-68 as amended by Revenue Regulations No. 1-83, the employees' retirement trust fund of which is administered by a trustee in accordance with a Trust Indenture executed by and between the employer as trustor and the trustee or trustees of the employees' retirement trust fund, duly signed by the parties to the trust and acceptance by the trustees indicated therein.  In case of a corporate trustee, same must be a domestic corporation authorized to perform trust functions and transact business as a trust corporation under Republic Act No. 337, otherwise known as the "General Banking Act", as amended.

Other employees' trust funds adverted to in this Order shall refer to the trust funds of employees other than those of private employers/companies, the tax exempt qualification of which had been determined/adjudicated by the BIR under then Section 56(b) (now Section 53(b)) of the Tax Code and not under R.A. 4917 or Section 28(b)(7)(A) of the Tax Code, e.g., PNB Provident Fund, CB Provident Fund, Land Bank of the Philippines Provident Fund, GSIS Provident Fund, NPC Employees' Savings & Welfare Plan, NHA Provident Fund, etc.

On the other hand, an insured plan established and maintained by an employer under a Deposit Administration Contract or Deferred Annuity Contract, as the case may be, executed by and between the employer as the insured or policyholder and an Insurance Company as the insurer is a non-trusteed plan.  A non-trusteed annuity plan is evidenced only by the aforementioned contracts with an Insurance Company.  Insurance companies under Philippine laws are insurers and are not authorized to perform trust functions.

III
Documentation/Substantiation Requirements
Claims for refund or tax credit of the 20% final withholding tax on interest income from Philippine currency bank deposits, and on yield/monetary benefit from deposit substitutes, e.g. money market placements, treasury bills, etc., trust fund and similar arrangements of trusteed private retirement Plans/employees' trust (as defined in paragraph II above) which was deducted and remitted to the government, should be filed in writing by the trustee/duly authorized trust manager of the fund with the Commissioner of Internal Revenue, Attn.: Appellate Division, National Office Building, BIR, Diliman, Quezon City within two (2) years from the date of payment of said tax, together with the following documents/papers:

a. Written waiver of the confidentiality of bank deposits under RA 1405 (Annex "A") duly signed by the trust-claimant's trustee/duly authorized trust manager authorizing the Commissioner of Internal Revenue or his duly authorized representative/assigned revenue officer to conduct the necessary verifications relative to his claim for tax credit/refund.  A separate waiver should be executed by the claimant for each deposit account maintained with each bank;

b. Sworn statement from the depository bank concerned that so much withholding tax was deducted from the interest income of the trust fund/depositor-claimant and remitted to the BIR on a particular date, as evidenced by copies of the Payment Order/Confirmation Receipt or Revenue Official Receipt and/or the duly validated payment in the Withholding tax returns attached to the statement.  The only officers of the bank who can certify for this purpose shall either be the President, Treasurer, or Comptroller.  It is important that the complete name and designation of the bank signing official should be clearly indicated in the sworn statement;

c. Where the trustee of the BIR-approved employees' trust fund or private retirement benefit plan trust funds purchased government securities from a financial institution, two (2) sworn statements shall be submitted by the said trustee, namely: (1) from the Central Bank to the effect that it sold government securities, e.g. Treasury Bills or Treasury Notes, to the named commercial bank(s) on such a date, serial numbers, amount of government securities sold, interest income/yield, and 20% FWT; and (2) from the commercial bank to the effect that it sold such government securities to the tax-exempt employees' or pension trust (as heretofore defined/identified) on a particular date, serial numbers, amount of government securities sold, interest income/yield and 20% FWT; and

d. Photocopy or xerox copy of the latest Certificate of Accreditation/Adjudication as a qualified trusteed private retirement Plan or employees' trust issued by the BIR to the trust-claimant duly certified to by the Chief or Asst. Chief of the Legislative, Ruling and Research Division, BIR.

IV
Verification/Certification/Reportorial Requirements
a)      The Appellate Division shall immediately refer to the Banks, Financing and Insurance Division, the written claim for tax credit or refund for verification and report on, among others, the total amount of claimant-trust's bank deposits/investments and interest income claimant-trust's bank yield thereon during the period covered by the claim as well as the total amount of withholding tax actually deducted therefrom.

b)      Upon receipt of the report of investigation in paragraph (a) above, the Appellate Division shall refer for verification and certification to -

(1)   The Accounting Division - as to whether the amount of tax withheld and deducted from the claimant-trust's interest income/yield as reported in paragraph (a) above had been actually remitted to the BIR, and

(2)   The Receivable Accounts/Billing Division - as to whether the claimant-trust has other pending tax liabilities to the government.

No action shall be taken on the claims for tax credit or refund of the 20% final withholding tax unless the foregoing requirements and conditions have been strictly complied with.

V
Effectivity
This order shall take effect immediately.

Adopted: 15 Oct. 1992

(Sgd.) JOSE U. ONG
Commissioner of Internal Revenue
Annex “A”
WAIVER OF SECRECY OF BANK D
EPOSIT
I_____________________________________ of ________________________ representing _________________ in order to facilitate the processing of our claim for refund on the withholding taxes imposed on us by the Bureau of Internal Revenue hereby waive our right to secrecy of our bank deposits pursuant to Republic Act No. 1405.  This shall constitute our written permission to allow the Commissioner of Internal Revenue or his duly authorized representative to look into our bank records for the purpose of establishing the veracity of our claim that the interest income of our investment/ trust/pension funds are subjected to the 20% final withholding tax, which tax was deducted and remitted but  _______________________

(Name of Bank)

This written permission shall be limited only for the purpose abovementioned and that it shall automatically terminate upon accomplishment thereof.

Executed this _____ day of ___________ in ______________, Philippines.