Abiera Law Office

December 3, 2007 BIR RULING [DA-607-07] PD 1246 039-99 Abiera Law Office 14th Floor, JAKA building 6780 Ayala Avenue, Makati City Attention: Atty. Rafael D. Abiera, Jr. Gentlemen : This refers to your letter dated October 24, 2007 requesting that the estate of deceased Thomas Moffat Slater Maxwell be exempted from the payment of estate taxes. HCEaDI It is represented that the deceased, Thomas Moffat Slater Maxwell, of 15 Cadwell Road Paington, domiciled in England and Wales, a non-resident, left a Will upon his death on January 8, 2003 which was probated in the High Court of Justice, The District Probate Registry, at Bristol, a copy of which is attached as Annex "A"; that at the time of his death, he left personal property consisting of bank deposits under a FCDU account with the Hong Kong and Shanghai Banking Corporation in Makati; that the value of the deposits in US dollars is equivalent in pesos to P7,922,413.00 as of January 31, 2003; that a petition for ancillary probate of the Will was filed in the Regional Trial Court of Makati where the Will was probated upon petition of the Ancillary Administrator, attached as Annex "B"; and that the deceased in this case being a non-resident alien and the only asset in the Philippines being a foreign currency deposit with the Hong Kong and Shanghai Banking Corporation, Makati, the estate is exempt from the estate tax pursuant to BIR Ruling No. 039-99, copy of which is attached as Annex "C". In reply, please be informed that pursuant to Section 85 of the Tax Code of 1997, as amended, the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, provided, however, that in the case of a non-resident decedent who at the time of his death was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the Philippines shall be included in his taxable estate. DCcTHa However, Section 1 of P.D. 1246, amending Section 6 of R.A. 6426, provides that all foreign currency deposits made under the said Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, including interest and all other income or earnings of such deposits, are exempted from any and all taxes whatsoever irrespective of whether or not these deposits are made by residents or non-residents so long as the deposits are eligible or allowed under aforementioned laws and, in the case of non-residents, irrespective of whether or not they are engaged in trade or business in the Philippines. Based on the foregoing, the foreign currency deposits of a non-resident alien decedent including interest and all other income or earnings of such deposits are exempt from estate and all other taxes whatsoever as long as the deposits are eligible or allowed under R.A. No. 6426, as amended. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. cICHTD Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service