Generally, all publicly-offered securities must be registered with the Securities and Exchange Commission (SEC). Exemptions are granted for securities issued by the Government, Bangko Sentral ng Pilipinas (BSP), local government units, and any foreign government that has diplomatic relations with the Philippines.
A credit rating from the Philippine Rating Service Corporation (PhilRatings), or any BSP-recognized credit rating agency, is required to issue corporate bonds and commercial paper.
Generally, all foreign-denominated debt instruments must be registered with the BSP.
Securities dealers, brokers, self-regulatory organizations, and clearing agencies are some of the participants that must be registered with the Securities and Exchange Commission (SEC) before dealing in securities. Included in this section are the registration requirements, procedures, regulations, and a recent amendment to the Securities Regulation Code (SRC). The SEC also provides the full list of registered participants at its website.
Accounting Standards
The Securities and Exchange Commission (SEC) and Bangko Sentral ng Pilipinas (BSP) adopted International Accounting Standards (IAS) and the International Financial Reporting Standards (IFR), effective with annual financial statements beginning 1 January 2005. Philippine Accounting Standards' (PAS) PAS 32 (Financial Instruments: Disclosures and Presentation) and PAS 39 (Financial Instruments: Recognition and Measurement) are based on IAS Nos. 32 and 39, respectively.
The standards require banks and non-bank financial institutions to mark-to-market investment portfolios classified under Trading Account Securities and Available-for-Sale Securities. However, treatment of gains and losses arising from changes in fair value is different. BSP Circular No. 476, which is linked below, outlines the rules and regulations that govern accounting for investments by banks and non-bank financial institutions. The SEC guidelines outline the new accounting standards.
Investment Funds
Trusts that manage Unit Investment Trust Funds (UITFs) are required to compute net asset values per unit (NAVPu) on a daily basis. The NAVPu is the sum of the market value of each investment less fees, taxes, and other qualified expenses defined under each UITF trust agreement. Trusts are required daily to reconcile a fund’s resultant mark-to-market value with unrealized gains and losses versus the book value of the fund’s investments in financial instruments. Any discrepancies must be resolved within the day. Daily market values of investments are based on local government securities fixings. Bloomberg’s MART1 and MRTN1 are used to determine these prices. BSP rules and regulations on UITF mark-to-market valuation can be found by following the links provided below.
Under the Tax Reform Act (Republic Act 8424), interest income from Philippine peso-denominated government or corporate debt securities is subject to a 20% final withholding tax. The withholding tax rate applies to both resident and non-resident aliens engaged in trade or business in the country. Government securities are exempt from capital gains tax, while a 5–10% tax rate is levied on other debt securities.
In February 2004, a new Documentary Stamp Tax Bill (R.A. 9243) was passed that temporarily waived document stamp taxes levied on secondary trading of debt and equity instruments, and on borrowing or lending securities traded at a registered exchange.
A summary of tax rates for individual and corporate investors can be found by following the link provided below.
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