BIR Ruling No. 240-82

August 25, 1982 BIR RULING NO. 240-82 228-0 000-00 240-82 Quasha Asperilla Ancheta Valmonte Pea & Marcos Law Offices Don Pablo Bldg., 114 Amorsolo St. Makati, Metro Manila Attention: Atty . Edgar E . Tarriela Gentlemen : This refers to your letter dated October 12, 1981 requesting a ruling on whether withdrawals made by customers of your client, a foreign bank authorized by the Central Bank to engage in foreign currency deposit unit (FCDU) transactions in the Philippines from its FCDU accounts normally made in the form of bank drafts, telegraphic transfers or traveller's checks are subject to documentary stamp taxes. In reply, please be informed that under Section 24(f)(2) of the Tax Code as amended by Presidential Decree No. 1773, income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transaction with nonresidents, offshore banking units in the Philippines, local commercial banks including branches of foreign banks that may be authorized by the Central Bank to transact business with foreign currency deposit system units and other depository banks under the expanded foreign currency deposit system shall be exempt from all taxes , except net income from such transactions as may be specified by the Minister of Finance, upon recommendation of the Monetary Board to be subject to the usual income tax payable by banks. Accordingly, since the exemption from all taxes refers only to the income derived by your client, the depository bank from its foreign currency deposit transactions, the bank drafts, telegraphic transfers or travellers' checks which will be issued by the said bank in case of withdrawals from its FCDU account are subject to the documentary stamp tax under Sections 228 and 229 of the Tax Code, as amended. aisadc Very truly yours, TOMAS C. TOLEDO Acting Commissioner