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

September 19, 1985 BIR RULING NO. 163-85 260-A 032-85 163-85 Gentlemen : In reply to your letter dated June 7, 1985, 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 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). However, in those cases where the bank passed on the 1% transaction tax to the manufacturers, importers and exporters and the latter agree to pay the same, the bank is still considered the party liable for the payment thereof; and, the tax passed on to the other party shall form part of the cost of purchase/sale of foreign exchange. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner