Expenses Evidenced by Credit Memos

September 5, 1960 BIR RULING NO. 380-60 Messrs. Sycip, Gorres, Velayo & Co. 490 San Luis, Manila Gentlemen : In reply to your letter dated May 5, 1960, I have the honor to inform you as follows: 1. The legal international par value of the Philippine peso being equivalent to one half () of a United States dollar, dollar income accruing to subsidiaries in the Philippines of foreign corporation which are remitted to said subsidiaries by means of credit memos as well as expenses debited to the local corporation must, for income tax purposes, be convertible at the official rate of 2 to 1 or P2.00 for every $1.00. Expenses evidenced by credit memos are not deductible unless supported by evidence other than said memos. Where actual dollar remittances are made, necessarily the applicable rates provided for by the Central Bank regulations must apply. 2. Compensation payable in dollars to foreign technicians for services rendered in the Philippines are convertible at the free market rate. The free market peso equivalent of such compensation shall be the basis of the income tax payable by said technicians and of the deductions allowable to the employer. Where such dollar payments are made in the United States with dollars not originating from this country, the convertible rate shall be at 2 to 1. 3. Investments in this country in the form of machinery and equipment shall be evaluated on the basis of the landed cost thereof. The dollar value of the importation is convertible at the exchange rate applied by the Bureau of Customs in the determination of the duties and taxes due thereon. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue