Exchange Rate Rules for Tax Conversion

Items of gross income and deductions incurred in foreign currencies must first be converted to U.S. dollar.
Conversion rate applied is the average interbank reference rate for the taxable year when income was earned or deductions incurred.
This average rate is sourced from the U.S. Dollar Rates of Selected Currencies by the Treasury Department of the Central Bank of the Philippines.
If the foreign currency is not listed, the International Tax Affairs Division will provide the appropriate reference rate.
Example provided for the taxable year 1990 rates in Exhibit A.

Amounts converted to U.S. dollar shall be converted to Philippine peso using the average peso/dollar interbank reference rate for the taxable year.
The rate is available in the Peso/Dollar Monthly Averages report by the Central Bank of the Philippines.
Example rate for taxable year 1990 is ₱24.3105 per U.S. dollar.

When converting tax liability from U.S. dollar to Philippine peso at the time of payment, the prevailing peso/dollar interbank reference rate on that payment date applies.
This exchange rate is published daily in selected national newspapers for taxpayer reference.

If tax is paid in a foreign currency other than Philippine peso, the U.S. dollar amount of the tax liability should be converted to the foreign currency using the prevailing exchange rate posted by the foreign post at the payment date.

Deficiency tax is calculated by deducting previously paid income taxes in U.S. dollars from the income tax due as determined by audit, stated in U.S. dollars.
This deficiency amount is converted to Philippine peso using the prevailing peso/dollar interbank reference rate at the time of assessment or preparation of the Transcript of Assessment.

All prior revenue memoranda or parts thereof inconsistent with these rules are amended or modified accordingly.