Export Sales Paid for in Acceptable Foreign Currency and Accounted under BSP Regulations Qualify as Zero-rated Sales

1994 BIR RULING NO. 176-94 100 (a) (1) 000-00 176-94 San Miguel Corporation San Miguel Avenue Pasig, Metro Manila Attention: Atty . Amado Colon Tax Manager Gentlemen : This refers to your faxed letter dated August 31, 1994 requesting for a confirmation of your opinion that your export sales, paid for in acceptable foreign currency and accounted for in accordance with the Rules and Regulations of the Bangko Sentral Ng Pilipinas (BSP) will qualify as zero-rated sales even if the proceeds thereof are not converted into Philippine currency. cdt In reply, please be informed that under BSP Circular No. 1389 issued on April 13, 1993, pertinent portions of which are quoted hereunder as follows: "Circular No. 1389 " CONSOLIDATED FOREIGN EXCHANGE RULES AND REGULATIONS "Pursuant to Monetary Board Resolution No. 246 dated March 26, 1993 the foreign exchange rules and regulations on current accounts, capital accounts, foreign currency deposit units, offshore banking units and representative offices of foreign banks are hereby consolidated as follows: "PART ONE. CURRENT ACCOUNTS "CHAPTER I " NON-TRADE FOREIGN EXCHANGE RECEIPTS AND DISBURSEMENTS, TRANSFERS OF LOCAL CURRENCIES AND GOLD TRANSACTIONS "Sec. 1. Disposition of Foreign Exchange Receipts . Foreign exchange receipts, acquisitions or earnings of residents from non-trade sources may, at the option of said residents, be sold for pesos to Authorized Agent Banks (AABs) or outside the banking system, retained, or deposited in foreign currency accounts, whether in the Philippines or abroad. All categories of banks (except Offshore Banking Units [OBUs]), duly licensed by the Central Bank shall be considered as AABs. xxx xxx xxx "Sec. 20. Disposition of Export Proceeds . Foreign exchange receipts, acquisitions or earnings of residents from exports may, at the option of said exporter, be sold for pesos to AABs or outside the banking system, retained, or deposited in foreign currency accounts, whether in the Philippines or abroad and may be used freely for any purpose. xxx xxx xxx the exporters are given the option to sell their foreign currency earnings to the Authorized Agent Banks (AABs) or to deposit the same in foreign currency accounts in banks located within or outside the Philippines. Accordingly, your opinion that export sales paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP qualify as zero-rated sales even if the proceeds thereof are not converted to Philippine pesos, is hereby confirmed. LLjur Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue