Imposition of Additional One Per Cent (1%) Tax on the Gross Value Received by Banks, Non-Bank Financial Intermediaries and Authorized Foreign Exchange Dealers

October 12, 1984 REVENUE REGULATIONS NO. 16-84 SUBJECT : Imposition of Additional One Per Cent (1%) Tax on the Gross Value Received by Banks, Non-Bank Financial Intermediaries and Authorized Foreign Exchange Dealers TO : All Internal Revenue Officers and Others Concerned Pursuant to the provision of Section 326, in relation to Section 4 of the National Internal Revenue Code of 1977, as amended, these Regulations are hereby promulgated to govern the manner of imposition of the additional tax of one per cent (1%) on the sale or purchase of foreign exchange by banks, non-bank financial intermediaries and other authorized foreign exchange dealers. SECTION 1 . Tax on foreign exchange transactions . An additional tax of one per cent (1%) shall be imposed on the gross value of every sale or purchase of foreign exchange by all banks, non-bank financial intermediaries and other authorized foreign-exchange dealers. SECTION 2 . Manner of computation of tax base . For purposes of determining the gross peso value of every sale or purchase of foreign exchange such value shall be computed by applying the official rate of exchange between the Philippine peso and the foreign currency that is prevailing on the date of the actual consummation of the sale or purchase. In the case of sale of foreign exchange arising from export proceeds and other inward remittances, the gross value shall not be diminished by commissions paid, documentary stamps and other charges incurred on such transactions. Similarly, in the case of foreign exchange licenses to cover imports and other outward remittances, the gross value shall not be increased by commissions paid, documentary stamps and other charges incurred on such transactions. SECTION 3 . Time of declaration and payment of taxes . The tax imposed on the foreign exchange, transacted within one week, shall be payable on the first banking day of the succeeding week and it shall be the duty of every bank and non-financial intermediary and authorized foreign exchange dealer to make a true and complete return (B.I.R. Form No. _____) of the value of foreign exchange sold or purchased during the week and pay the tax due thereon. SECTION 4 . Penalties . (1) Failure to file and pay the tax . If the required return is not filed or the tax not paid within the time specified by law, the amount of the tax shall be increased by twenty-five per cent (25%), the increment to form part of the tax and the entire unpaid amount shall be collected in the same manner as the tax . cdt (2) Willful neglect to file, or false or fraudulent return . In case of willful neglect to file the return within the period specified by law, or in case a false or fraudulent return is willfully filed, there shall be added to the tax or to the deficiency tax in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge or fifty per cent (50%) of the amount. The amount so added to any tax shall be collected in the same manner and as part of the tax unless the tax has been paid before the discovery of the falsity or fraud, in which case, the amount so added shall be collected in the same manner as the tax. In addition to the above administrative penalties, the criminal and civil penalties as provided for under Section 337 of the Tax Code of 1977 shall be imposed. SECTION 5 . Repealing Clause . All regulations, rules, orders or portions thereof which are inconsistent with the provisions of these Regulations are hereby revoked. SECTION 6 . Effectivity . These Regulations shall take effect on foreign exchange transactions effected beginning October 15, 1984. ALFREDO PIO DE RODA Acting Minister of Finance Recommended by: RUBEN B. ANCHETA Acting Commissioner