Foreign Currency Transactions and Taxation for Expanded Depository Banks
- Qualified depository banks may obtain foreign currency loans and conduct transactions with non-residents, offshore banking units, and other qualified depository banks.
- Net income from these foreign currency transactions is subject to a 5% tax in lieu of all other taxes, except as specified by the Secretary of Finance.
- Interest income from foreign currency loans to resident entities (excluding offshore banking units or qualified banks) is subject to a 10% final withholding tax.
- Income derived by non-resident lenders not engaged in Philippine trade or business from lending foreign currency to these banks is exempt from income tax.
Amendment on Secrecy of Deposits and Non-Applicability of Certain Laws
- Secrecy of deposits for foreign currency transactions is governed by Republic Act No. 1405.
- Usury Law (R.A. 2566) and Uniform Currency Law (R.A. 529) provisions do not apply to foreign currency transactions authorized under this decree.
Regulatory Authority and Implementation
- The Monetary Board of the Central Bank is tasked with issuing necessary regulations for this decree’s implementation.
Effectivity
- The decree took effect immediately upon its approval on September 30, 1976.