REVENUE MEMORANDUM CIRCULAR NO. 84-2012 issued on December 26, 2012 clarifies the tax treatment of interest income earnings on loans that are not securitized, assigned or participated out.
            Interest income received by banks from payors belonging to the Top 20,000 Corporations strictly arising from individual loans obtained from banks that are not securitized, assigned or participated out remains to be subject to Creditable Withholding Tax (CWT) at the rate of 2%. Corollarily, interest income paid by banks designated as Top 20,000 Corporations strictly arising from loans made to such banks that are not securitized, assigned or participated out remains to be subject to CWT at the rate of 2%.
           The 20% Final  Withholding  Tax  and  CWT  imposed  under t he  Tax  Code  of  1997,  as amended, and existing regulations cover interest arising from or paid out of debt securities.