MORNBFI Vol. 1 - Planters Development Bank

APP. Q-3209.12.31e. The interest of each participant shallbe determined by a formal method ofparticipation valuation established in thewritten plan of the CTF, and no participationshall be admitted to or withdrawn from thefund except on the basis of such valuation.(Subsec. 4410Q.6)8. Tax-exempt common trust fundsThe following shall be the features/requirements of CTFs which may qualify forexemption 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 toCTFs established on or after January 3, 2000;b. The CTF indenture or plan as wellas evidences of participation shall clearlyindicate that the participants shall be limitedto individual trustors/investors who areFilipino citizens or resident aliens and thatparticipation is non-negotiable and nontransferable;c. The date of contributions to the CTFshall be clearly indicated in the evidence ofparticipation to serve as basis for the trustee-QB to determine the period of participationfor tax exemption purposes;d. The CTF indenture/plan as well asthe evidence of participation shall indicatethat pursuant to Section 24(B)(1) of R.A. No.8424, interest income of the CTF derivedfrom 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 exemptfrom said final tax provided participation inthe CTF is for a period of at least five (5)years. If participation is for a period less thanfive (5) years, interest income shall besubject to a final tax which shall be deductedand withheld based on the followingschedule:RateParticipation Period 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 date of contributionshall be clearly indicated in the evidence ofparticipation which shall serve as basis fordetermining the participation period of eachparticipant; ande. Tax-exempt CTFs established underthis Subsection shall be subject to theprovisions of Subsecs. 4409Q.1(c),4409Q.2 up to 4409Q.7, and Items “2 to 7”of this Appendix.Regarding the required prior authorityand disclosure under Subsecs. 4409Q.2 and4409Q.3, a list of prospective and/oroutstanding investment outlets that is madeavailable by the trustee for the review of allCTF clients may serve as an alternativecompliance, which list shall be updatedquarterly. (Subsec. 4410Q.7)9. Custody of Securities. Investmentsin securities of all existing CTFs shall bedelivered to a BSP-accredited third partycustodian not later than 31 October 2004.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-32 - Page 3