The terms and conditions of trust, other fiduciary or investment management agreements including UITF plans shall contain provisions regarding the applicability of regulations governing taxation on the income of trust, other fiduciary or IMAs. For this purpose, the trustee, fiduciary or investment manager shall maintain adequate records and shall include information such as the amount of final income tax withheld at source and the amount withheld by the trustee, fiduciary or investment manager in the periodic reports submitted to trustors, beneficiaries, principals and other parties in interest.
With respect to tax-exempt UITFs, individual trust and IMAs established under Section 24(B)(1) of R.A. No. 8424, the bank’s trust department or investment management department shall be responsible for obtaining the tax-exemption certifications which may be required by the BIR for the interest-bearing instruments where the UITFs, individual trust funds and investment management funds will be invested. Likewise, the banks shall ensure that the correct amount of final tax on the interest income on the interest-bearing instruments is withheld/deducted from the proceeds from the UITF participation, trust or IMA and remitted to the BIR in the event said tax becomes due such as when funds are withdrawn before the required five (5)-year holding period or when corporations happen to invest in the tax-exempt trust instruments created within the purview of R.A. No. 8424.