Finance chief signs revised IRR on GOCC Dividend Law

Finance Secretary Cesar V. Purisima has signed the revised implementing rules and regulations (IRR) on the Government- Owned and -Controlled Corporations (GOCC) Dividend Law.

"Instituting good governance in our GOCCs has led to a reversal of the milking cow phenomenon," Purisima said.

After years of GOCCs seeking clarifications and exemptions, the revised IRR establishes the streamlined and clarified rules for remitting dividends to the national treasury, the Department of Finance said Wednesday.

The revised rules amended the IRR that was issued on 5 August 1998. It also brings the Dividend Law or Republic Act No. 7656 up to date with the new structures and standards involving GOCCs. 

It simplifies the assessment of dividends through the use of the Corporate Income Tax Returns filed with the Bureau of Internal Revenue (BIR) or authorized agent banks as the basis for dividend computation, according to the department.

This emphasizes more transparent computations and the efficient administration of dividend assessments by removing book earnings that have no effect on cash balances.

"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 with P29 billion in 2010 – bringing the total so far to P135.02 billion (from July 2010 to December 2015)," the Finance chief noted.

"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," Purisima added.

Full payments of the minimum dividend are now mandated on or before 15 May of each year, or one month after 15 April – the deadline for filing of corporate income tax returns.

Expanding on the government’s reforms in public finance and in the government corporate sector, the revised IRR included as part of its ‘Declaration of Policy” the impetus to “promote fiscal discipline among GOCCs,” and to “improve National Government cash management,” the Finance Department said.

"As part of the Department of Finance’s thrust to improve revenue generation and fiscal discipline, the minimum dividend rate may be raised to more than the 50 percent in cases of excess cash or windfall of revenues, provided that the viability and purposes for which the GOCC has been established are not impaired," it said.

"This will consolidate government funds and will prevent any excess or idle cash among GOCCs," it added.

The revisions were done in recognition of the role of the Governance Commission for GOCCs as the oversight body with the authority to approve performance contracts with GOCCs and administer sanctions for non-compliance with the IRR, the department said. – VS, GMA News