Prescribing the Procedure in the Handling and Disposition of Foreign Currency Received for the Payment of Internal Revenue Taxes from Taxpayers Residing Abroad

July 2, 1973 REVENUE MEMORANDUM ORDER NO. 25-73 SUBJECT : Prescribing the Procedure in the Handling and Disposition of Foreign Currency Received for the Payment of Internal Revenue Taxes from Taxpayers Residing Abroad TO : All Internal Revenue Officers and Others concerned. OBJECTIVE For the purpose of expediting the acknowledgment of payments, and of establishing a system in the handling and disposition of foreign currency received by the Bureau of Internal Revenue for the payment of internal revenue taxes made by taxpayers residing abroad, this Order is hereby issued. SCOPE All remittances for the payment of internal revenue taxes made by taxpayers residing abroad, in foreign currency, checks, drafts or money orders received, except those mentioned in Procedure No. 11 and 12, shall be sold to the Central Bank of the Philippines. aisa dc PROCEDURES The following are the procedures and guidelines to implement this arrangements: 1. The foreign currency received in payment of internal revenue taxes shall be sold to the Central Bank at not less than 1% below the day's interbank guiding rate or at rates which may later on be set by the Central Bank in accordance with law. 2. The foreign exchange to be sold to the Central Bank shall be limited to the following authorized foreign currencies or those which may later on be authorized by the Central Bank to form part of the Philippine International Reserves: a. United States Dollar b. Canadian Dollar c. British Pound d. Netherlands Guilder e. Swiss Franc r. French Franc g. Deutsche Mark h. Japanese Yen i. Australian Dollar 3. For every sale of foreign currency, the Bureau of Internal Revenue shall accompany the offer to sell with a covering letter to the Central Bank, duly signed by the Chief, International Operations Division, for the Commissioner of Internal Revenue, requesting credit to the account of the Treasurer of the Philippines of the peso proceeds of the foreign currency involved and authorizing the Central Bank to debit the said account for the peso value of the foreign currency sold in the form of checks, drafts or money orders which may later on be dishonored/returned by the drawee plus surcharges at the guiding rate the entry was passed. The Chief of the International Operations Division, thru the Collection Agent assigned in said division, shall further submit the break-down of the foreign currency sold on the attached format, which is marked as Annex "A". 4. The Central Bank, thru its Foreign Exchange Department, shall acknowledge receipt of the foreign currency sold and credit the peso proceeds thereof to the account of the Treasurer of the Philippines on the date of sale or not later than the day following. 5. The Treasurer of the Philippines shall likewise submit to the Central Bank a general authority to credit the value of the foreign currency involved and to debit the account of the Treasurer of the Philippines for the value of the foreign currency in checks, drafts or money orders which may later on be dishonored by drawee/correspondent banks at the guiding rate the entry was passed. 6. The original of the credit and debit advices evidencing the transaction shall be transmitted by the Central Bank to the Treasurer of the Philippines. The Foreign Exchange Department of the Central Bank of the Philippines shall transmit to the Chief, International Operations Division of the Bureau of Internal Revenue, through the authorized representative of the latter, the duplicates of these credit or debit advices together with the dishonored/returned checks, if there be any. 7. The Bureau of Internal Revenue shall deliver the foreign currency thru the Collection Agent assigned in the office of the International Operations Division, to the Foreign Exchange Department, Central Bank, Manila, not later than twelve o'clock noon of any banking day. 8. For reconciliation purposes the Chief Accounting Division of the Bureau of Internal Revenue shall install and maintain separate subsidiary records for transactions under this arrangement. For this purpose, the Chief, Accounting Division shall be furnished a copy of the Abstract of Demand Drafts, Checks/Travellers Checks, Notes and Coins, in Foreign Currencies (Annex "A") after each sale of such foreign currencies. 9. All foreign currencies received for the payment of internal revenue taxes made by taxpayers residing abroad shall be acknowledged by the issuance of revenue official receipts (BIR Form 25.24), adequate quantity of which shall be provided the Collection Agent assigned in the office of the International Operations Division, exclusively for this purpose. The peso equivalent of the foreign currency received shall be written on the revenue official receipt after determination thereof in accordance with the provisions of Procedure No. 4 hereof. 10. In the preparation of the Revenue Official Receipt, the Collection Agent assigned in the office of the International Operations Division shall indicate in the "Remarks" portion of said revenue official receipt the amount and kind of foreign currency receipted for. 11. Dollar checks locally known as dollar checks with "Lipstick" received at the office of the International Operations Division shall not form part of the deposits with the Central Bank. Instead, the Collection Agent assigned in the International Operations Division shall have these "Lipstick" dollar checks exchanged with peso drafts with the First National City Bank of New York in Manila and thereafter remit the amount to the Treasurer of the Philippines in the same manner as the revenue collections from taxpayers residing in the Philippines is made. The corresponding revenue official receipt shall be issued only after the conversion to pesos of the dollar check. In all such cases, the remittance advice (Gen. Form No. 14-B) shall be prepared and distributed accordingly after validation thereof. A separate Report of Collections (BIR Form No. 12.31) shall be prepared for "Lipstick" dollar checks. 12. Section 4 of Department of Foreign Affairs Order No. 3-71 dated December 29, 1970, requires that if a taxpayer residing abroad draws a check in pesos for the payment of his internal revenue tax, such check shall be drawn in favor of the Commissioner of Internal Revenue and against a bank in Manila. However, if a taxpayer residing abroad draws a check in pesos for the payment of internal revenue tax liability, such taxpayer must show proof of the legitimacy of the source or sources of the peso funds, that is, such peso funds are derived from income of his properties or other legitimate income in the Philippines otherwise, the internal revenue tax shall be paid in any of the foreign currency enumerated in Procedure No. 2. This is in reciprocity with the cooperative policy of the Central Bank in not allowing the grant of dollar allocation unless the applicant submits a clearance that he has no pending internal revenue tax obligation. 13. No accommodation or endorsed checks shall be accepted under this arrangement. This Order shall take effect after approval, and after concurrence of the authorities in other agencies of the Government concerned. MISAEL P. VERA Commissioner of Internal Revenue CONCURRED: VICENTE P. RODRIGUEZ R. G. CRUZ Treasurer of Philippines Authorized Representative of the Central Bank APPROVED: CESAR VIRATA Secretary of Finance ANNEX "A" ABSTRACT OF DEMAND DRAFTS, CHECKS/TRAVELLERS CHECKS, NOTES AND COINS * , IN FOREIGN CURRENCIES, SOLD BY THE BUREAU OF INTERNAL REVENUE, MANILA _______________ Date The Foreign Exchange Department 3rd Floor, New Central Bank Building Vito Cruz, Manila Gentlemen : Enclosed are foreign currencies for sale to you the proceeds of which shall be credited to the account of Treasurer of the Philippines in our favor. You are hereby authorized further to debit the account of the Treasurer of the Philippines for the peso value, plus charges, of any of the enclosed checks which may be dishonored/returned by your correspondent banks likewise debiting our account for the amount covered thereby. Very truly yours, COMMISSIONER OF INTERNAL REVENUE FOREIGN EXCHANGE DEPARTMENT By: CENTRAL BANK OF THE PHILIPPINES ___________________________________ Received by:__________________ Chief, Internal Operations Division * For notes and coins, indicate only the currency symbol, number of pieces and denominations.