2009 ANNUAL REPORT FINANCIAL SUPPLEMENTS - BDO

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NOTES TO FINANCIAL STATEMENTSDecember 31, 2009, 2008 and 2007(Amounts in Millions of Philippine Pesos, Except Per Share Data or as Indicated)Parent Bank2009 2008Tax Base Tax Effect Tax Base Tax EffectAllowance for impairment P 19,678 P 5,903 P 6,016 P 1,805NOLCO 6,245 1,874 9,886 2,966MCIT 536 536 369 369P 26,459 P 8,313 P 16,271 P 5,14027.2 Optional Standard DeductionsBDO ANNUAL REPORT 2009124Effective July 2008, Republic Act 9504 was approved giving corporate tax payers an option to claim itemizeddeduction or optional standard deduction (OSD) equivalent to 40% of gross sales. Once the option to useOSD is made, it shall be irrevocable for the taxable year for which the option was made. Since 2008, the BDOUnibank Group had opted to continue claiming itemized deductions.27.3 Change in Applicable Tax RateEffective January 1, 2009, in accordance with Republic Act 9337, RCIT rate was reduced from 35% to 30%and non-allowable deductions for interest expense from 42% to 33% of interest income subjected to final tax.27.4 Gross Receipts Tax (GRT)/ VATBeginning January 1, 2003, the imposition of VAT on banks and financial institutions became effective pursuantto the provisions of Republic Act 9010. The Parent Bank and BDO Private became subject to VAT based ontheir gross receipts, in lieu of the GRT under Sections 121 and 122 of the Tax Code which was imposed onbanks, non-banks financial intermediaries and finance companies in prior years.However, on January 29, 2004, Republic Act 9238 reverted the imposition of GRT on banks and financialinstitutions.On May 24, 2005, the amendments on RA 9337 was approved amending, among others, the gross receiptstax on royalties, rentals of property, real or personal, profits from exchange and on net trading gains within thetaxable year on foreign currency, debt securities, derivatives and other similar financial instruments from 5% to7% effective November 1, 2005.27.5 Documentary Stamp Tax (DST)Documentary stamp taxes (at varying rates) are imposed on the following:(a)(b)(c)(d)Bank checks, drafts, or certificate of deposit not bearing interest, and other instruments;Bonds, loan agreements, promissory notes, bills of exchange, drafts, instruments and securities issuedby the Government or any of its instrumentalities, deposit substitute debt instruments, certificates ofdeposits bearing interest and other not payable on sight or demand;Acceptance of bills of exchange and letters of credit; and,Bills of lading or receipt.
NOTES TO FINANCIAL STATEMENTSDecember 31, 2009, 2008 and 2007(Amounts in Millions of Philippine Pesos, Except Per Share Data or as Indicated)On February 7, 2004, RA 9243 was passed amending the rates of DST, the significant provisions of which aresummarized below.(a)(b)(c)On every issue of debt instruments, there shall be collected a DST of one peso on each two hundredpesos or fractional part thereof of the issue price of any such debt instrument. Provided, that for suchdebt instruments with terms of less than one year, the DST to be collected shall be of a proportionalamount in accordance with the ratio of its term in number of days to 365 days. Provided further thatonly one DST shall be imposed on either loan agreement or promissory notes to secure such loan.On all sales or transfer of shares or certificates of stock in any corporation, there shall be collected a DSTof 75 centavos on each two hundred pesos, or fractional part thereof, of the par value of such stock.On all bills of exchange or drafts, there shall be collected a DST of 30 centavos on each two hundredpesos, or fractional part thereof, of the face value of any such bill of exchange or draft.(d)The following instruments, documents and papers shall be exempt from DST:• Borrowings and lending of securities executed under the Securities Borrowing and LendingProgram of a registered exchange, or in accordance with regulations prescribed by the appropriateregulatory authority;• Loan agreements or promissory notes, the aggregate of which does not exceed P250 thousand orany such amount as may be determined by the Secretary of Finance, executed by an individualfor his purchase on installment for his personal use;• Sale, barter or exchange of shares of stock listed and traded through the local stock exchange fora period of five years from the effectivity of RA 9243;BDO ANNUAL REPORT 2009125• Fixed income and other securities traded in the secondary market or through an exchange;• Derivatives including repurchase agreements and reverse repurchase agreements;• Bank deposit accounts without a fixed term or maturity; and,• Interbank call loans with maturity of not more than seven days to cover deficiency in reserveagainst deposit liabilities.
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FINANCIAL HIGHLIGHTSIn Billion Peso
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REPORT OF INDEPENDENT AUDITORSTo th
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STATEMENTS OF INCOMEFor the Years E
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STATEMENTS OF CHANGES IN EQUITYFor
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STATEMENTS OF CASH FLOWSFor the Yea
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2009 ANNUAL REPORT FINANCIAL SUPPLEMENTS - BDO

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