BSP Circular Letter

August 9, 2001 BSP CIRCULAR LETTER TO : All Authorized Agent Banks (AABs) and their Subsidiaries/Affiliate Forex Corporations Attached, for your guidance, is the list of minimum documentary requirements that AABs and/or their subsidiary/affiliate forex corporations shall require from residents purchasing foreign exchange for non-trade purposes. ITSacC This Circular-Letter serves to clarify Section 2 of Circular No. 1389 s. 1993, as amended. (SGD.) ALBERTO V. REYES Deputy Governor MINIMUM DOCUMENTATION REQUIREMENTS FOR THE SALE OF FX FOR NON-TRADE PURPOSES 1) Travel Funds (Only for permanent 1. Applicant's passport residents of the Philippines 2. Passenger ticket 2) Educational Expenses/Student 1. Statement of enrollment or Maintenance acceptance by the school abroad showing that the student is working or about to work for a degree or taking a high technology course; 2. School bills/statements of account covering tuition and other school fees, and 3. Sworn statement of the student that he does not enjoy scholarship/ grant/fellowship/stipend and/or is not gainfully employed. 3) Correspondence Studies 1. Proof of admission or enrollment in AABs may sell foreign exchange to correspondence school; cover tuition fees for correspondence 2. Description of curriculum courses; studies which shall be directly remitted 3. Statement of fees, dues or total cost of to the correspondence school. course; and 4. Schedule of payment/billings from the school abroad. 4) Medical Expenses 1. Certification from a local doctor certifying the need for the patient to undergo medical treatment abroad and the non-availability of such treatment locally; and 2. Estimate of cost of medical/hospital treatment abroad/statement of account with the hospital/bills of expenses. 5) Support of Dependents Abroad 1. Consular certificate or its equivalent AABs may sell foreign exchange documents to prove that the covering the monthly living allowance dependent is residing abroad and is not abroad of a child not more than 21 gainfully employed in the country of years of age, spouse or parent of a residence abroad; Philippine resident. 2. Certified true copy of birth certificate, marriage contract, adoption papers, whichever is applicable, to prove that dependent is the wife, husband, child or parent of the remitter applicant; and 3. Proof that remitter is a resident of the Philippines 6) Emigrants' assets 1. Proof of permanent residence of emigrant/beneficiary abroad; 2. Proof of ownership of the asset/s by emigrant/beneficiary abroad; 3. Payment of applicable taxes; 4. In case of income from real properties, a statement of rentals/income earned, certified by an independent CPA; 5. In case of transfer of proceeds of capital assets, the AABs shall additionally require. a. Copy of deed of sale b. If the subject of the sale is real estate, proof that the transaction was registered with the Register of Deeds. 6. In case of capital transfer of testate and intestate inheritance and legacies. a. Copy of court order approving the partition and distribution of estate; b. Copy of the extrajudicial settlement and partition duly registered with Register of Deeds. 7. For transfer of proceeds of life insurance benefits, proof of payment of the proceeds of the policy; 8. For remittance of proceeds of sales of personal property, copy of deed of sale; In case of transfer of proceeds of sale of shares of stock, AABs shall also require: a. Copy of the confirmation of sale of authorized securities dealer/broker or the issuing corporation; b. Certification of stock transfer agent showing the name of issuing corporation, date of issuing par value, cost of acquisition, and that the shares of stock owned by the beneficiary have been sold at the price indicated. 10. In case of retirement benefits, AABs shall, in addition to Items 1 to 4, also require: a. Evidence of payment of retirement benefits; b. If the remittance will be done in five (5) years or over after receipt of the retirement pay, evidence regarding custody of the funds. 7. Salary of foreign expatriates 1. Certification of employer on the amount of compensation paid to the foreign nationals stating whether the same had been paid in foreign exchange or in pesos, and if in foreign exchange, proof that the foreign exchange was sold for pesos to AABs; 2. Copy of the withholding tax receipts unless exempt by law; 3. Photocopy of the ACR and MOLE Alien Employment Permit of the foreign national. 8) Producers' Share/TV Film Rentals 1. Statement of remittable share rental The producers' or foreign lincensors' certified by an independent CPA; contractual share which shall not 2. Proof of payment of withholding tax. exceed 60% of the net proceeds less local distribution expenses, from the distribution/exhibition of such films imported without foreign exchange payments, may be remitted in full, net of taxes, TV film rentals may also be remitted in full based on rates stipulated in the individual contracts or agreements. 9) Commissions on Exports due Foreign 1. Agency agreement Agents 2. Export Declaration or Export Permit 3. Export Bills of lading and invoices 4. Statement of Accounts/Invoices 5. Computation showing how the amount sought to be remitted was arrived at; and 6. Certification from receiving bank concerned indicating the amount of export proceeds which have been sold for pesos. 10) Foreign Charges on Exports 1. Freight contract. If no formal contract of Phil. exporters may buy foreign affreightment has been executed, a duly exchange from AABs to pay for freight noted freight bill/statement of account charges due shipping companies, may be presented; whether foreign or Filipino-owned, on 2. Export declaration; export shipments. 3. Sales Invoice; 4. Bill of Lading; 5. Bills/Statements of account on foreign charges. 11) Advertising Costs 1. Copy of advertising agreement; and 2. Original statement of accounts or bills or invoices. 3. Clippings of appropriate page of publications or the advertisement. 12. Subscriptions 1. Subscription Agreement 2. Statement of Account or bills 13.) Charters and Leases of Vessels 1. Charter or Lease contract without option Domestic operators or lessees of to purchase foreign-owned vessels may remit 2. Billings/Statement of account from the foreign exchange for charter fees or owner or lessor duly certified by an lease rentals independent CPA 3. Proof of payment of withholding tax 14) Membership dues and registration 1. Proof of membership in the foreign or fees international association. Remittance to be made directly to the 2. Billings for membership dues/registration associations abroad. fees 15) Port Disbursements 1. Copy of contract or agreement; Port disbursements abroad of aircrafts 2. Duly certified true copy of statement of and vessels of Phil. registry or accounts/bills/invoices (verified against chartered/leased by domestic operators original copy) for fuel, ship's stores and similar supplies, harbor/airfield fees, tonnage, repair and maintenance 16) Mail fees/International settlement of 1. Copy contract of agreement whenever accounts for telegraph, telegram, radio, applicable satellite and other communication 2. Duly certified statements of facilities accounts/bills/invoices 17) Salvage fees 1. Copy of contract for salvage services 2. Duly certified statement of accounts/bills/invoices 3. Proof of payment of applicable taxes 18) Income taxes due to Foreign 1. Certified true copy of MOLE-approved Governments contract of employment; Income taxes due to foreign 2. Certified true copy of income tax return Government from foreign nationals covering the income tax payment sought with special temporary visa and MOLE to be remitted. employment permit, if required by law, who are employed in the Philippines and whose entire compensation (salary, allowances, bonuses and other fringe benefits) is paid for in foreign exchange inward-remitted into the Philippines. 19) Services/License/Consultancy Fees/ 1. Copy of the pertinent agreement Management Fees 2. Statement/Computation of fees due; and Foreign exchange payments for 3 Proof of payment of applicable management/service/consultancy withholding taxes on fees to be remitted. contract with foreign firms or individuals or residents not involving technology transfer may be serviced by AABs. 20) Retainers' fees 1. Copy of the agreement; and Foreign exchange payments by 2. Billings/invoices from the beneficiary residents to foreign professionals acting as liaison, counsel, agent on representative abroad may be serviced by AAB 21) Reinsurance premium/claims for 1. Original copy of certification from the losses Insurance Commissioner stating among and other payments of insurance others, that the amount is due and companies/brokers payable to the beneficiary. 2. In case of remittance of payment of claims for losses, AABs shall also require copy of Report of Damage on Survey Report rendered by an adjustor on Marine Surveyor and a copy of the Notice of Demand for Payment of Loss, both verified by OIC. 22) Freight Charges on Imports 1. Certified copy of Bills of Lading and Freight Invoice 2. Certified copy of LC/Sales Confirmation if Shipment is without LC. 23) Net Passenger Revenues of Foreign 1. Copy of the General Sales Agency Airlines Agreement or certified copy of the Foreign airlines authorized to do Bilateral Air Agreements; business in the Philippines may remit 2. Statement of Receipts and abroad their peso revenues, net of Disbursements for the period covered by commissions paid, peso commissions the Remittance, duly certified by an earned, commissions earned and ticket independent CPA; sales in foreign exchange. Agency 3. Proof of payment of the corresponding commissions shall be paid in the taxes; currency in which the tickets are sold. 4. Statement of gross Philippine billing corresponding to the period covered by the remittance; and 5. List of non-resident passengers who paid their tickets in pesos, if any, and list of passenger tickets refunded. 24) Freight Collections of Shipping 1. Copy of the Agency Agreements; Companies 2. Statement of Revenues and Expenses Shipping agents may remit to their duly certified by an independent CPA; principals abroad freight collections in 3. Proof of payment of corresponding taxes pesos, net of agency fees, commissions 4. Detailed statement of freight receipts and disbursements made in behalf of indicating name of payors, bills of lading, the principals. official receipts, date and amount of payment. 25. Transfer of savings expatriates 1. Contract of employment; Transfer of savings of expatriate 2. Certification of the employer that the employee may be allowed in full, net of contract has been terminated or taxes, when the contract of concluded; employment has been concluded or the 3. Statement of salaries paid during the employee has been transferred to other validity of the contract of employment; officer abroad. 4. Transcript of bank deposit account certified by the bank official. If the amount to be remitted comes from new deposits (less than one year placement), information regarding the sources of funds, supported by appropriate documents; 5. Proof of payment of Income taxes. 26) Royalties/Fees 1. Statement/computation of the Royalty/fee duly certified by independent CPA 2. Proof of payment of withholding taxes 3. Registration/Certificate of Compliance issued by Documentation Information Technology Transfer 27) Copyright fees 1. Copy of sales report to the non-resident author, publisher, or copyright owner 2. Statement/computation of copyright fees 3. Proof of payment of withholding tax 28. Investment in PSE listed securities 1. If the selling/remitting bank is also the (Circular Letter dated May 25, 2000) registering custodian bank a. Bangko Sentral Registration Document (BSRD) 2. If the selling/remitting bank is not the registering custodian bank a. Copy of BSRD b) Letter advice in the prescribed form from the registering bank 29) Direct Foreign Equity Investments 1. BSP registration 2. Proof of sale 30) Investment in Money Market 3. BSP registration instrument or bank deposits 4. Proof of sale 31) Dividends/Profits/Earnings 1. BSP registration 2. Board Resolution declaring the dividend 3. Audited financial statement covering the dividend declaration/profit earnings 32) Outward Investment 1. A project feasibility study, investment proposal, subscription agreement, bond/stock offering circular and such other documents showing the nature and place of the investment; and 2. A written undertaking to inward remit and sell for pesos thru AABs the dividends/earning or divestment proceeds from outward investments funded by FX purchased from AAB as required therein 3. BSP approval and registration (For outward investment exceeding $6 million per investor per year) 33) Foreign Currency Loan and Interest 1. BSP registration of loan and/or BSP Payment registration of payments pursuant to Circular 1389, as amended 2. Statement of account 3. If the selling bank is not the booking/remitting bank, the selling banks shall require the purchaser of foreign exchange, the following information a. name of lending bank b. original loan amount c. due date d. outstanding loan balance e. purpose of loan f. Invoice No. and amount of import bills liquidated by the proceeds of the loan (For FCDU loan qualified to be serviced by the banking system without specific BSP approval). Said information should be certified as to correctness by the Treasurer or higher officer of the company g. Certification from the booking/remitting bank responsible for the FCDU loan account that the bank has taken measures to ensure the client has not purchased foreign exchange from the banking system in excess of the amount of the outstanding loan balance plus the finance charge. h. The foreign exchange sold shall be remitted by the selling bank to the lending bank indicating in the draft ITT/PDDTS instruction, pertinent information of the loan account. All documents supporting the sale of foreign exchange shall be made available for verification by the examining BSP officers.