MORNBFI Vol. 1 - Planters Development Bank

§§ 4411Q.9 - 4413Q09.12.31b. Funds or property of each clientshall be accounted separately and distinctlyfrom those of other clients herein referredto as individual account accounting.(As amended by Circular No. 676 dated 29 December 2009)§ 4411Q.10 Tax-exempt individualinvestment management accounts. Thefollowing shall be the features/requirementsof IMAs of individuals which may beexempted from the twenty percent (20%)final tax under Section 24(B)(1) of R.A. No.8424 (The Tax Reform Act of 1997):a. The tax exemption shall apply toinvestment management agreementscontracted on or after 03 January 2000;b. The investment managementagreement shall only be between individualswho are Filipino citizens or resident aliensand investment manager banks. Theagreement shall be non-negotiable and nontransferable;c. The minimum amount of investmentfor an IMA shall be P1.0 million;d. The investment managementagreement shall indicate that pursuant toSection 24(B)(1) of R.A. No. 8424, interestincome of the investment management fundsderived from investments in interest-bearinginstruments (e.g., time deposits, governmentsecurities, loans and other debt instruments)which are otherwise subject to the twentypercent (20%) final tax, shall be exempt fromsaid final tax provided the funds are heldunder investment management by theinvestment manager for at least five (5) years.If said funds are held by the investmentmanager for a period less than five (5) years,interest income shall be subject to a finaltax which shall be deducted and withheldfrom the proceeds of the IMA based on thefollowing schedule–Holding PeriodRate of TaxFour (4) years to less than five (5) years 5%Three (3) years to less than four (4) years 12%Less than three (3) years 20%Necessarily, the investment managementagreement shall clearly indicate the datewhen the investment manager actuallyreceived the funds which shall serve as basisfor determining the holding period of thefunds;e. The investment manager may acceptadditional funds for inclusion in IMAswhich have been established as tax-exemptunder R.A. No. 8424. However, the receiptof additional funds shall be properlydocumented by indicating that they are partof existing tax-exempt IMAs and that theinterest income of the additional fundsderived from investments in interest bearinginstruments shall be exempt from the twentypercent (20%) final tax under the sameconditions mentioned in the preceding item.The document shall also indicate the datewhen the additional funds were receivedby the investment manager bank to serve asbasis for determining the minimum five (5)-year holding period for tax exemptionpurposes of the additional funds; andf. Tax-exempt individual IMAsestablished under this Subsection shall besubject to the provisions of Subsecs.4411Q.1(b) and 4411Q.2 up to 4411Q.8.Sec. 4412Q (Reserved)Sec. 4413Q Required Retained EarningsAppropriation. An institution authorized toengage in trust and other fiduciary businessshall, before the declaration of dividends,carry to retained earnings appropriated fortrust business at least ten percent (10%) ofits net profits realized out of its trust,investment management and other fiduciarybusiness since the last preceding dividenddeclaration until the retained earnings shallamount to twenty percent (20%) of itsauthorized capital stock and no part of suchretained earnings shall at any time be paidout in dividends but losses accruing in thecourse of its business may be chargedagainst surplus.Q RegulationsPart IV - Page 32Manual of Regulations for Non-Bank Financial Institutions