Tax Alert No. 78 [Revenue Regulations (RR) No. 24-2020 dated 14 September 2020]

Implementing Section 4(uu) of Republic Act No. 11494 (Bayanihan to Recover as One Act) on the exemption from Documentary Stamp Tax of loans extended or credits restructured 

The Secretary of Finance, through the recommendation of the Commissioner of Internal Revenue, has issued RR No. 24-2020 to implement the Documentary Stamp Tax (DST) exemption on loan term extensions and credit restructuring pursuant to Section 4(uu) of Republic Act No. 11494.

The exemption from the DST shall also cover all extensions of payments and/or maturity periods of all loans, including, but not limited to:

1. salary, personal, housing, commercial, and motor vehicle loans, amortizations, financial lease payments and premium payments
2. credit card payments, falling due, or any part thereof, on or before 31 December 2020 contemplated under Section 4(uu) of RA No. 11494
3. micro-lending, including those obtained from pawnshops, and extensions thereof made on or before 31 December 2020

Interbank loans and bank borrowings shall remain subject to DST under Sections 179, 195 and 198 of the National Internal Revenue Code, as amended, and which shall include, among other things:

1. interbank call loan (IBCL) transactions
2. borrowings evidenced by deposit substitute instruments
3. purchases of receivables with recourse

Funds borrowed by banks from trust departments of banks or investment houses are not treated as interbank loans and bank borrowings.

Note, also, that the regulations included other financial institutions under the supervision of the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), and the Cooperative Development Authority (CDA) as covered institutions.

The regulations took effect upon its publication in Malaya Business Insight on 2 October 2020.

You may access the full version of the regulations through the BIR website.