Legal Rate of Exchange of the Philippine Peso to the United States Dollar

October 28, 1959 BIR RULING NO. 559-59 Messrs. Stewart, Cunanan & Co. Certified Public Accountants 107, 13th Street, Port Area Gentlemen : With reference to your letter dated July 31, 1959, I have the honor to inform you that the legal rate of exchange of the Philippine peso to the United States dollar is at 2 to 1. While it is true that, in remitting dollars abroad, the person remitting actually spends pesos in excess of the ratio of 2 to 1, nevertheless, the rate of conversion is still 2 to 1, the excess being charges in purchasing foreign currency at the time of purchase. Accordingly, if dollar expenses incurred abroad are charged to a domestic corporation by debit memo, say the amount of $1000, only the amount of P2000 may be considered as having already accrued as expenses. The charges incident to the conversion of the pesos to dollars shall be accrued only when the dollars are actually purchased and remitted abroad and such charges are actually incurred. It may be stated further that the dollar margin fee is not a tax, and, therefore, such item of expense may be allowed as deduction, for purposes of the income tax, only if incurred in accordance with the provisions of section 30(a)(1) of the Tax Code. This ruling revokes our Ruling No. 342, series of 1959. casia Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue