The Securitization Act of 2004

Section 27

The SPE in the form of an SPC shall be subject to income tax under Section 27(a), Chapter IV of the National Internal Revenue Code of 1997. An SPE constituted as an SPT shall be subject to income tax in accordance with the provisions of Section 61, Chapter X of the same Code.

Section 28

The sale or transfer of assets to the SPE, which includes sale or transfer of any and all security interest thereto, it made in accordance with the Plan shall be exempted from value-added tax (VAT) and documentary stamp tax (DST), or any other taxes imposed in lieu thereof. Except for registration fees with the Commission, all applicable registration and annotation fees to be paid, related or incidental to the transfer of assets, or the security interest thereto, shall be fifty percent (50%) of the applicable registration and annotation fees. The transfer of assets by dation in payment (dacion en pago) by the obligor in favor of an SPE shall not be subject to capital gains tax as provided under Section 27 (d)(5) of the National Internal Revenue Code of 1997.

Section 29

The original issuance of ABS and other securities related solely to such securitization transaction, such as, but not limited to, seller's equity, subordinated debt instruments purchased by the originator, and other related forms of credit enhancement shall be exempt from VAT, or any other taxes imposed in lieu thereof, but subject to DST. All secondary trades and subsequent transfers of ABS, including all forms of credit enhancement in such instruments, shall be exempt from DST and VAT, or any other taxes imposed in lieu thereof.

Section 30

The SPE, created pursuant to a Plan, shall not be classified as a ban, quasi-bank or financial intermediary under the provisions of the New Central Bank Act, the General Banking Law and the National Internet Revenue Code of 1997, and shall not be subject to the gross receipts tax (GRT) or any other tax imposed in lieu thereof.

Section 31

The ABS issued by an SPE pursuant to the Plan approved by the Commission shall not be considered as deposit substitutes under the laws mentioned in Section 30 hereof: Provided, however, That for purposes of taxation, the yield for the ABS shall be subject to a twenty percent (20%) final withholding tax, except those held by tax-exempt investors.

Section 32

Where the implementation of the Plan or the provision of this Act requires or provides a transfer of the assets and collateral back to the Originator or Seller, then the provisions of Section 28 shall apply to such transfer.

Section 33

In order to promote the securitization of the mortgage and housing related receivables of the government housing agencies as may be determined by the Housing and Urban Development Coordinating Council (HUDCC) and the Department of Finance (DOF), the yield or income of the investor from any low-cost or socialized housing-related ABS shall be exempt from income tax.

Section 34

For purposes of securitization pursuant to this Act, the buyer of real estate on installment payments may agree to waive his rights under Republic Act No. 6552, the provision of Section 7 of the said notwithstanding.