NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
S. No.
SENATE
2308
23 JUL17 P2 37
received BV
Introduced by Senator MARK A. VILLAR
AN ACT
CREATING A TAX-FREE MINORS' DEPOSIT ACCOUNT, AMENDING FOR THE 
PURPOSE PRESIDENTIAL DECREE NO. 1158, AS AMENDED, OTHERWISE 
KNOWN AS THE NATIONAL INTERNAL REVENUE CODE
EXPLANATORY NOTE
According to World Bank, only 25.0% of adult Filipinos are informed with 
fundamental financial concepts.1 The Philippines placed in the bottom 30 of 144 countries, 
based on the global research on financial literacy conducted by the Standard & Poor's 
Global Ratings. This information demonstrates the fact that financial literacy is still a work 
in progress for many Filipinos.
Financial literacy must start at an early age. Saving practices and preferences 
formed during childhood stay through adulthood, and being familiar with financial 
concepts impacts their financial decisions.
By fostering and educating financial literacy from an early age, long-term 
improvements in Filipino mindsets about savings and finance can be achieved. Tax-free 
savings and investments for children were established due to similar concerns overseas, 
like the United States and the United Kingdom.
1 Bangko Sentral ng Pilipinas Media and Research - Speeches, (n.d.). www.bsp.gov.ph. 
https://www.bsp.gov.ph/SitePages/MediaAndResearch/SpeechesDisp.aspx?ItemId::;:993


Thus, this bill seeks to incentivize minors to save their money in bank deposits. 
Interest income accruing to bank deposits, of whatever nature, held by minors shall be 
exempt from tax. The tax exemption covers deposits amounting to not more than One 
Hundred Thousand Pesos (Php 100,000.00), the average amount of Filipino deposit 
account. The proposed policy aims to develop a sustainable culture of financial literacy 
throughout the country.
In light of the foregoing, the approval of this bill is earnestly sought.
MARK A. VILLAR


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
SENATE
s. NO. 2308
.xlT'x
23 JUL17 P 2 '37
received
Introduced by Senator Mark A. Villar
AN ACT
CREATING A TAX-FREE MINORS' DEPOSIT ACCOUNT, AMENDING FOR THE 
PURPOSE PRESIDENTIAL DECREE NO. 1158, AS AMENDED, OTHERWISE 
KNOWN AS THE NATIONAL INTERNAL REVENUE CODE
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. Short Title. - This Act shall be known as the "Kiddie Savers Act".
2 
Sec. 2. Policy Statement - It is the policy of State to promote financial literacy
3 
and stability among its citizens. Further, the State shall promote a culture of long-term
4 
saving and investment. In line with this, the State shall create awareness regarding the
5 
importance of financial security and encourage the youth to learn more about good
6 
spending habits.
7 
Sec. 3. Tax Free Minor Deposit Accounts. - Interest income accruing to bank
8 
deposits, of whatever nature, held by minors shall be exempt from tax: Provided, That
9 
such exemption shall only be used with respect to deposits opened and maintained in
10 
one banking institution so designated by the minor and/or the person exercising parental
11 
authority over him: Provided further, That the aggregate total of all deposit accounts held
12 
by a minor within the designated banking institution shall not exceed One Hundred
13 
Thousand Pesos (Phpl00,000.00): Provided finally. That in cases where the aggregate
14 
total shall exceed One Hundred Thousand Pesos (Phpl00,000.00), such excess shall be
15 
subject to tax.


1 
Sec. 4. Account Name and Signatory. - The deposit accounts covered by this Act
2 
shall be opened and maintained under the name of the minor: Provided, That the person
3 
exercising parental authority over the minor may be named a signatory therein.
4 
Sec. 5. Withdrawals from Minor's Deposit Account - Withdrawals shall only be for
5 
expenses that will accrue to the benefit of the minor, the parameters of which shall be
6 
determined in the implementing rules and regulations of this Act.
7 
Sec. 6. Source of Funds. - Any deposit made into the account shall only be from
8 
lawful sources available to the child. The aggregate total of deposits made by parents
9 
into the minor's deposit account shall be subject to a limit of Twenty Five Thousand Pesos
10 
(Php25,000.00) per parent. Should the aggregate total deposit per parent exceed such
11 
limit, then the whole account shall be taxable.
12 
Sec. 7. Amendment of National Internal Revenue Code. - Section 24(B)(1) of
13 
Presidential Decree No. 1158, as amended up to Republic Act No. 9504, is hereby
14 
amended to read as follows:
15
16 
(B) Rate of Tax on Certain Passive Income. -
17 
(1) Interests, Royalties, Prizes, and Other Winnings. - A final tax at the rate of
18 
twenty percent (20%) is hereby imposed upon the amount of interest from any
19 
currency bank deposit and yield or any other monetary benefit from deposit
20 
substitutes and similar arrangements;
21 
XXX XXX XXX
22 
Provided, further. That interest income from long-term deposit or investment in
23 
the form of savings, common or individual trust funds, deposit substitutes,
24 
investment management accounts and other investments evidence by certificates
25 
in such form prescribed by the Bangko Sentrai ng Pilipinas (BSP) shall be exempt
26 
from the tax imposed under this Subsection: Provided, FURTHER, That should
27 
the holder of the certificate pre-terminate the deposit or investment before the
28 
fifth (5th) year, a final tax shall be imposed on the entire income and shall be
29 
deducted and withheld by the depositary bank from the proceeds of the long-term
30 
deposit or investment certificate based on the remaining maturity thereof:


1 
XXX XXX XXX
2 
PROVIDED, FINALLY, THAT THE FINAL TAX IMPOSED IN THIS SECTION
3 
SHALL BE SUBJECT TO THE PROVISIONS OF THE KIDDIE SAVERS' ACT
4 
Sec. 7. Implementing Rules and Regulations. - The Bureau of Internal Revenue
5 
CBIR") and the Bangko Sentral ng Pilipinas (BSP"), shall formulate the necessary rules
6 
and regulations for the effective implementation of this Act.
7 
Sec. 8. Repealing Clause. - All laws, decrees, executive orders, issuances, rules
8 
and regulations, or parts thereof inconsistent with the provisions of this Act are hereby
9 
repealed or modified accordingly.
10 
Sec. 9. Separability Clause. - If any provision or part of this Act shall be declared
11 
invalid or unconstitutional, the remaining parts or provisions not affected shall remain in
12 
full force and effect.
13 
SEC. 10. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
14 
publication in the Official Gazette or in two (2) newspapers of general circulation.
Approved,