Chapter 15-A
REGULAR INCOME TAXATION: Special Corporations
FOREIGN/ EXPANDED CURRENCY DEPOSIT UNIT
Distinction of FCDU. OBU, and EFCDU
FCDUs
limited to short-term foreign currency transactions
division of domestic local bank
EFCDUs
allowed both short-term and longer term
may be a division of a domestic bank or a foreign abnk
OBU
division of a foreign bank
Tax on EFCDUs
Income of EFCDUs from foreign currency transactions:
a. Non-residents (offshore income) – EXEMPT from income tax
b. Residents
1. Banks under foreign currency deposit system
a. Offshore banking units
b. Local commercial banks and branches of foreign banks authorized by BSP to transact
business with FCDUs
(Exempt from income tax)
2. Other Residents ( onshore income)
a. Interest income only- 10% final tax
b. Other income ( commissions and gains)- RCIT
Taxation of FCDUs taxed the same
way as EFCDUs
Tax On Income Of Depositors Under The EFCDs
Non-residents- income from transactions with depository banks under expanded system shall be EXEMPT
Residents- subject to 15% final tax
Tax on Regular Banking Units or RBUs
25% regular corporate income tax
Allocation of Cost and Expenses of Banks
Specific identification- expenses directly traceable to an income are allocated to that income
Pro-rata Allocation- Expenses not directly traceable to an income are allocated pro-rata on the ration of all
income
(non-forex income of FCDU is subject to regular tax)
(the expense allocable to the exempt income and income subject to FT shall not be deductible against gross income
subject to regular tax)
