Request for Exemption from 1% Transaction Tax on Foreign Letters of Credit for the Importation of Rice and Wheat by NFA

June 25, 1985 BIR RULING NO. 096-85 200-A 032-85 096-85 Gentlemen : This refers to your letter dated April 30, 1985 requesting exemption from the 1% transaction tax on foreign letters of credit for the importation of rice and wheat by the National Food Authority (NFA). In reply, I have the honor to inform you that your request cannot be granted for lack of legal basis. Although the exemption from all taxes of the NFA has been restored under FIRB Resolution No. 1-85 dated January 4, 1985, the 1% foreign exchange transactions tax is a direct liability of the bank imposed as an additional tax on gross receipts, under Section 260-A of the Tax Code, as added by P.D. No. 1959 and implemented by Revenue Regulations No. 16-84 and Revenue Memorandum Circular No. 30-84. (BIR Ruling No. 260-A-000-00-032-85) Such being the case, the PNB is liable to the payment of 1% transaction tax on the gross value in pesos of foreign exchange sold to cover letters of credit of the NFA for its importation of rice and wheat. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner