Request for Exemption of the American Embassy Diplomatic Community from the 1% Foreign Exchange Transaction Tax

February 11, 1985 BIR RULING NO. 017-85 260-A 000-00 017-85 Gentlemen : This refers to your letter dated November 5, 1984 requesting that the American Embassy Diplomatic Community be exempt from the 1% foreign exchange transaction tax imposed by Section 260-A of the Tax Code as amended by P.D. No. 1959 and implemented by Revenue Regulations No. 16-84. In reply, please be informed that pursuant to Section 260-A of the Tax Code as amended by P.D. No. 1959 which took effect on October 15, 1984, an additional tax of 1% shall be imposed on all transactions involving buying and selling of foreign exchange for peso by all banks, non-bank financial intermediaries, and all authorized foreign-exchange dealers or agents who are directly liable to the payment of the said 1% foreign exchange transaction tax. (Revenue Memorandum Circular No. 30-84 dated October 19, 1984) Such being the case, the American Embassy Diplomatic Community is not subject to the 1% foreign exchange transaction tax imposed by Section 260-A of the Tax Code as amended by P.D. No. 1959. However, if the party liable to the payment of the 1% excise tax will pass this on, in the sale of the foreign exchange, to the American Embassy Diplomatic Community, no exemption will be recognized because diplomatic agents are not exempt from the payment of indirect taxes under the Vienna Convention on Diplomatic Relations (BIR Ruling No. 53-82). Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner