Parties Liable for the Payment of the 1% Foreign Exchange Transaction Tax

August 28, 1985 BIR RULING NO. 151-85 260-A 032-85 151-85 Gentlemen : This refers to your letter dated January 18, 1985 addressed to the Central Bank of the Philippines, and referred to this Office, relative to the collection of the 1% foreign exchange transaction tax. You have represented that you are not collecting the tax from your clients as your role in these transactions is merely that of a channel for communication and payment, and not as seller or buyer of foreign exchange; that the spot remittances courses thru that Bank involve foreign exchange amounting to P1,281,629,367.26 for PNOC, and P44,251,774.45 for NDC. In reply, I have the honor to inform you that under Section 260-A of the Tax Code, as amended by P.D. No. 1959, pertinent portion of which is quoted hereunder as follows: "Sec. 260-A. Additional Tax on Banks. non-bank financial intermediaries and authorized foreign-exchange dealers . There shall be collected in addition to the tax on gross receipts imposed under Section 260 hereof, a tax of one per centum (1%) based on the gross value of every sale or purchase of foreign exchange by all banks, non-bank financial intermediaries and all authorized foreign exchange dealers. xxx xxx xxx the parties liable for the payment of the 1% foreign exchange transaction tax are the banks, non-bank financial intermediaries and other authorized foreign exchange dealers. (Sec. 1, Revenue Regulations No. 16-84; Revenue Memorandum Circular No. 30-84) Such being the case, since the remittances coursed thru you by your aforesaid clients involve buying and selling of foreign exchange for peso, you are liable to the payment of the 1% foreign exchange tax. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner