Finance Secretary Cesar V. Purisma has signed the revised implementing rules and regulations (IRR) to the government-owned and -controlled corporations (GOCCs) Dividend Law after years of GOCCs seeking clarification on the issue from the government.
The revised IRR is an amendment to one issued on August 1998. The revised IRR implements Republic Act 7656 or the GOCC Dividend Law. This law required GOCCs to declare dividends to the national government.
Under the law, all GOCCs are required to remit at least half of their annual net earnings as cash, stock or property dividends to the national government. The Department of Finance (DOF) said the revised IRR establishes streamlined and clarified rules for remitting dividends. It also brings the Dividend law up to date with new structures and standards involving GOCCs.
“Instituting good governance in our GOCCs has led to a reversal of the milking-cow phenomenon. Whereas GOCCs used to milk state coffers, national government revenues are now being augmented by the government corporate sector, with remittances in 2015 amounting to P38.68 billion, compared to P29 billion in 2010—bringing the total so far to P135.02 billion [from July 2010 to December 2015],” Purisima said in a statement on Wednesday. “The revised IRR makes it simpler and easier to be a good GOCC. They should be encouraged to find that we are starting to expect more from them, owing to their good progress,” he added.
In particular, the revised IRR simplifies the assessment of dividends through the use of the corporate income tax returns duly filed with the Bureau of Internal Revenue (BIR) or authorized agent banks as the basis for dividend computation.
“This emphasizes more transparent computations and the efficient administration of dividend assessments by removing book earnings that have no effect on cash balances,” the DOF said.
Full payment of the minimum dividends is now mandated on or before May 15 of each year, or one month after April 15 as the deadline of filing of corporate income tax returns to the BIR. Also in the IRR is the likelihood of higher minimum dividend rate or 50 percent at present, which is in line with the thrust to improve revenue generation and fiscal discipline. This will be implemented in cases of excess cash or windfall revenues, provided that the viability and purposes for which the GOCC has been established are not impaired.