Prescribing a Uniform Exchange Rate for U.S. Dollars and Other Foreign Currencies to Philippine Pesos for Internal Revenue Tax Purposes for the Calendar Year 1972 and All Fiscal Years up to June 30, 1973

September 8, 1972 REVENUE MEMORANDUM CIRCULAR NO. 44-72 SUBJECT : Prescribing a Uniform Exchange Rate for U.S. Dollars and Other Foreign Currencies to Philippine Pesos for Internal Revenue Tax Purposes for the Calendar Year 1972 and All Fiscal Years up to June 30, 1973 TO : All Internal Revenue Officers and Others Concerned For the purpose of establishing a uniform rate of exchange of U. S. dollars or other foreign currencies to Philippine pesos for internal revenue tax purposes for the calendar year 1972 and all fiscal years up to June 30, 1973, the following schedule of exchange rates are hereby prescribed for reference and guidelines of all concerned: 1. In the case of regular or habitual transactions involving actual remittances or acceptances of US dollars or other foreign currencies such as salaries, wages, fees or other remunerations for personal services, royalties, rents, interests or other fixed or determinable annual or periodical income, the following rules shall govern: a. Where actual remittance is made to taxpayers abroad, the bank's selling rate of exchange of the foreign currency involved at the time of such remittance shall be used for the purpose of arriving at the tax base; b. Where acceptance is made by taxpayers in the Philippines and there is an actual conversion of the foreign currency to Philippine pesos, at anytime during the year, the bank's buying rate of exchange at the time of such conversion shall be used for the purpose of arriving at the tax base. 2. In the case of regular or habitual transactions where there are no actual remittances or acceptances of U. S. dollars or other foreign currencies such as salaries, wages, fees or other remunerations for personal services, royalties, rents, interests or other fixed or determinable annual or periodical income, the following rules shall govern: a. Where income accruing to taxpayers abroad is credited to their account by mere bookkeeping entries and such income is subject to withholding tax in the Philippines, the rate of exchange quoted by the Foreign Exchange Department of the Central Bank on the date the withholding tax accrues shall be used for the purpose of computing the tax base; b. Where such income accruing to taxpayers abroad is not subject to withholding tax but is liable for income tax after the close of the calendar year the rate of P6.70 to US $1.00 shall be used; c. In the case of citizens of the Philippines residing abroad and receiving income in the country of their residence such income shall be converted at the rate of P6.70 to US $1.00 for income tax purposes; d. Where taxpayers in the Philippines are entitled to receive income from abroad and there is no actual conversion of the foreign currency to Philippine pesos during the year, the same rate of P6.70 to US $1.00 shall be used for income tax purposes. 3. In the case of transactions involving the computation of advance sales or compensating taxes, the rate of exchange used by the Bureau of Customs at the time of the payment of such taxes shall prevail. 4. In the case of transactions involving the computation of percentage taxes, the rate of exchange quoted by the Foreign Exchange Department of the Central Bank on the date the percentage tax accrues shall be used. 5. In the case of an isolated or casual transaction involving remittances or acceptances of US dollars or other foreign currencies such as dividends, interests, capital gains or other gains from occasional sales of property and the like, the same rules promulgated in paragraphs 1 and 2 shall apply. 6. 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 P6.70 to US $1.00 shall be used. 7. Where the currency involved is other than U.S. dollars, the foreign currency shall first be converted to U.S. dollars at the prevailing rate of exchange between the two currencies. The resulting amount shall then be converted to Philippine pesos in accordance with the above promulgated rules. Enforcement and Publicity All internal revenue officers and others charged with the enforcement of internal revenue Laws are enjoined to enforce the provisions of this Circular accordingly and to give it as wide a publicity as possible. cdt MISAEL P. VERA Commissioner of Internal Revenue APPROVED: CESAR VIRATA Secretary of Finance