Prescribing a Uniform Rate for the U.S. dollar and Other Foreign Currencies to the Philippine Peso for Internal Revenue Tax Purposes Covering the Calendar Year 1970

February 2, 1979 REVENUE MEMORANDUM CIRCULAR NO. 14-79 SUBJECT : Prescribing a Uniform Rate for the U.S. dollar and Other Foreign Currencies to the Philippine Peso for Internal Revenue Tax Purposes Covering the Calendar Year 1970 TO : All Internal Revenue Officers and others concerned In order to establish a uniform rate of exchange of the U.S. dollar and other foreign currencies to Philippine peso for the calendar year 1979, the following schedules of exchange rates are hereby prescribed for reference and guidance of all concerned: aisa dc 1. The daily guiding rate of exchange quoted by the Central Bank of the Philippines shall be applied in any of the following instances for purposes of determining income, estate, gift and percentage tax liabilities: (a) A nonresident citizen electing to pay in Philippine pesos his income tax which has been previously computed in terms of U.S. dollars or any internal revenue tax liabilities, the guiding rate of exchange quoted by the Central Bank on the day he makes his payment; (b) Nonresident aliens paying their internal revenue tax obligations in terms of the U.S. dollar, the guiding rate of exchange quoted by the Central Bank on the date of payment shall be used; (c) Tramp vessels and off-line international airlines, the guiding rate of exchange quoted by the Central Bank on the date such vessel lifted cargo from Philippine ports or on the date such off-line international airlines uplift anywhere in the world of passage documents sold in the Philippines whether for passenger excess baggage, cargo or mail, provided the cargo or mail originates from the Philippines; (d) Charter or lease of vessels, aircraft or equipment owned by nonresidents of the Philippines, where the charter hire or rental is denominated in U.S. dollar or other foreign currencies, the guiding rate of exchange quoted by the Central Bank on the date the payment accrued; (e) Sales abroad of shares of stock in a domestic corporation, the guiding rate of exchange quoted by the Central Bank on the date such sales take place shall be used; (f) In the case of Offshore Banking Units (OBU) and Foreign Currency Deposit Units (FCDU) electing to pay in Philippine peso the 5% final income tax on their net offshore income which have been previously computed in terms of the U.S. dollar, the guiding rate of exchange quoted by the Central Bank on the day payment is made shall be used. With respect to the onshore income of such Offshore Banking Units and Foreign Currency Deposit Units subject to the 10% withholding tax at source, conversion shall be at the guiding rate of exchange quoted by the Central Bank on the last day of the calendar quarter when their taxable income accrued; (g) In the case of sub-contractors and service contractors engaged in the petroleum operations in the Philippines, the guiding rate of exchange quoted by the Central Bank at the close of business on the last banking day of the month preceding the month of disbursement or receipt shall be used; and (h) Other isolated or casual transactions involving remittances or acceptances denominated in U.S. dollar or other foreign currencies such as dividends, interests, capital gains or other gains from occasional sales or disposal of property and the like subject to withholding taxes under Sections 53 and 54 of the Tax Code, as amended, the guiding rate of exchange quoted by the Central Bank on the date the tax on such transactions accrued, shall be used. 2. The conversion rate of P7.40 to U.S.$1.00 shall be applied in any of the following instances for purposes of determining income and percentage tax liabilities: (a) In the case of resident citizens, resident aliens and domestic corporations deriving income in foreign currencies, whether within or without the Philippines under circumstances not falling in paragraph (1) above; (b) In the case of international carriers regularly operating in the Philippines; (c) Where an allocation of income and expenses is either required or allowed, for income tax purposes, under Section 37 of the Tax Code and the regulations promulgated under it, the same rate of P7.40 to U.S.$1.00 shall be used; (d) For purposes of the withholding tax on wages; (e) Valuation of real property and tangible personal property situated abroad for purposes of transfer taxes owned by a resident alien or by a Filipino decedent, regardless of the latter's residence at the time of death; (f) Income, war-profits and excess-profits taxes imposed by the authority of any foreign country being claimed as tax credits or deductions for income tax purposes, as well as estate, inheritance or death taxes imposed by the authority of such foreign country being claimed as tax credit for transfer tax purposes; and (g) All other cases not falling under the enumerations of paragraph (1) above. 3. The rates of exchange used by the Bureau of Customs shall be applied in the following instances: (a) Transactions involving the computation of advance sales taxes; and (b) Transactions involving the computation of compensating taxes. 4. Where the currency involved is other than the U.S. dollar, the foreign currency shall first be converted to U.S. dollar at the prevailing rate of exchange between the two currencies. The resulting amount shall then be converted to Philippine peso in accordance with the rules promulgated in paragraphs (1), (2) and (3). ENFORCEMENT AND PUBLICITY All internal revenue officers and others charged with the enforcement of internal revenue laws and regulations are hereby enjoined to enforce the provisions of this Circular accordingly and to give it as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner