REVENUE REGULATIONS NO. 4-2011 issued on March 15, 2011 prescribes the rules on the proper allocation of costs and expenses amongst income earnings of banks and other financial institutions, for Income Tax reporting purposes. Only costs and expenses attributable to the operations of the Regular Banking Unit (RBU) can be claimed as deduction to arrive at the taxable income of the RBU subject to regular Income Tax. Any cost or expense related with or incurred for the operations of Foreign Currency Deposit Unit/ Expanded Foreign Currency Deposit Unit (FCDU/EFCDU) or Offshore Banking Unit (OBU) are not allowed as deduction from the RBU’s taxable income. In computing for amount allowable as deduction from RBU operations, all costs and expenses should be allocated between the RBU and FCDU/EFCDU or OBU using the following basis: a. By Specific Identification Expenses which can be specifically identified to a particular unit (RBU, FCDU/EFCDU or OBU) shall be reported and declared as the cost or expenses of that unit. b. By Allocation Common expenses or expenses that cannot be specifically identified for a particular unit shall be allocated based on percentage share of gross income earnings of a unit to the total gross income earnings subject to regular Income Tax and Final Tax including those exempt from Income Tax. This method of allocation is likewise applicable to other financial institutions with reference to allocating cost and expenses among income earnings derived from active business operation which are subject to regular Income Tax, passive activities which are subject to Final Tax and other activities producing income which are exempt from Income Taxes. Any person who willfully files a declaration, return or statement containing information which are not true and correct as to every material matter shall be subject to the penalties prescribed under pertinent law, rules and regulations. Moreover, any and all applicable criminal offense (e.g. failure to supply correct information) under the NIRC of 1997, as amended, shall be filed against any person who is discovered to have committed any false declaration or misrepresentation.