Taxability of the Income from Foreign Currency of Offshore Banking Units in the Country

August 17, 1992 BIR RULING NO. 225-92 119 000-00 225-92 The Honorable The Secretary of Finance Manila S i r : This has reference to your memorandum dated June 4, 1992, requesting for the comment and recommendation on the query of Mr. J. Desmond Ormsby, Chairman, Offshore Bankers Association of the Philippines, as to whether income of Offshore Banking Units (OBU) in the country are exempt from the 5% gross receipts tax (GRT) imposed in Section 119 of the Tax Code. In reply, please be informed that the income of Offshore Banking Units from foreign currency transactions with (a) non-residents, other OBUs, local commercial banks and branches of foreign banks in the Philippines (offshore income and (b) residents (onshore income) is exempt from the gross receipts tax. However, all other income of OBUs not related to foreign currency transactions with any party whatsoever is subject to gross receipts tax under Sec. 119 of the Tax Code. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue