Law Summary

Purpose and Authority

• This Decree aims to implement a special excise tax on foreign exchange transactions to stabilize the national economy amidst recent peso exchange rate adjustments.
• Issued by Ferdinand E. Marcos, President of the Philippines, under constitutional authority.

Tax Imposition

• A special excise tax of 10% is levied on the value in pesos of foreign exchange sold by the Central Bank of the Philippines or its agents.
• Exemption: This tax does not apply to foreign exchange payments for merchandise imports into the Philippines.

Payment and Collection

• The tax must be paid by the purchaser of the foreign exchange to the Central Bank or its agents before any sale of foreign exchange subject to this tax occurs.
• Collected taxes are to be directed to the General Fund in the National Treasury and remitted according to established tax collection remittance conditions.

Penalties for Violations

• Violating the provisions of this Decree or related regulations results in penalties:
  • Fines: Between ₱10,000 and ₱50,000.
  • Imprisonment: Ranges from six months to five years.
  • If the offender is a corporation, association, or partnership, penalties will be imposed on responsible individuals (e.g., president, directors, managing partners).

Rulemaking Authority

• The Minister of Finance, in consultation with the Governor of the Central Bank, is tasked with creating necessary rules and regulations for the implementation of this Decree.

Repeal and Modification

• Any conflicting laws or regulations are repealed, revoked, or modified accordingly to align with this Decree.

Severability Clause

• If any provision of this Decree is deemed invalid, the remainder of the Decree remains effective and applicable to other persons or circumstances.

Effectivity

• This Decree takes effect immediately and will remain in force until December 31, 1985.

Key Takeaways

• A 10% excise tax on foreign exchange transactions is mandated, exempting merchandise imports.
• Purchasers are responsible for tax payment before any foreign exchange sale.
• Significant penalties exist for non-compliance, affecting both individuals and corporate officers.
• The Decree empowers the Minister of Finance for rule-making to ensure proper implementation.
• The law has a defined expiration date of December 31, 1985, and includes provisions for severability to protect the validity of remaining sections.