The Bangko Sentral has reached a compromise with the Bureau of Internal Revenue over back taxes on overnight placements of banks under the reverse repurchase agreement.

?We have started collecting withholding [taxes] starting August [and that?s] continuing,? Bangko Sentral Deputy Gov. Armando Suratos Jr. told reporters. ?We compromised with the BIR... and we paid a smaller amount. We paid 40 percent of what?s due, [and there were no more] penalties and other charges.?

He said the Bangko Sentral had ordered banks to remit the payment in full by April 3 of this year.

The back taxes refer to the 20 percent final withholding tax on interest income from which the Bureau of Internal Revenue had expected to raise some P3.6 billion.

The payment amounts to P1.44 billion, which is equivalent to 40 percent of P3.6 billion. The central bank earlier appealed the BIR?s assessment with the Court of Tax Appeals.

The central bank has not been withholding the 20 percent tax on interest income on earnings of banks from their placements in its overnight borrowing facility, or the reverse repurchase agreements, up until August last year. Eileen A. Mencias