28/01/2025
Your foreign currency deposit is exempt from the 6% estate tax
The (SC) has ruled that foreign currency deposit accounts are exempt from estate tax under Republic Act No. 6426 (RA 6426), also known as the ๐๐ฐ๐ณ๐ฆ๐ช๐จ๐ฏ ๐๐ถ๐ณ๐ณ๐ฆ๐ฏ๐ค๐บ ๐๐ฆ๐ฑ๐ฐ๐ด๐ช๐ต ๐๐ค๐ต ๐ฐ๐ง ๐ต๐ฉ๐ฆ ๐๐ฉ๐ช๐ญ๐ช๐ฑ๐ฑ๐ช๐ฏ๐ฆ๐ด.
In a Decision penned by Associate Justice Ramon Paul L. Hernando, the SCโs First Division upheld the claim for an estate tax refund filed by the estate of Charles Marvin Romig (Charles), an American national who was a resident of Puerto Galera, Oriental Mindoro.
Charles passed away in 2011 without leaving a will. His sole heir, Maricel Narciso Romig (Maricel), transferred ownership of his properties to herself, including a dollar deposit account, through an Affidavit of Self-Adjudication.
Maricel initially excluded the dollar deposit account from the estate tax computation but later paid an additional PHP 4.56 million to cover it. Subsequently, she sought a refund, arguing that foreign currency deposit accounts are exempt from estate tax under Section 6 of RA 6426.
The Commission on Internal Revenue denied her claim, asserting that the tax exemption over dollar deposit accounts was revoked by the 1997 ๐๐ข๐ต๐ช๐ฐ๐ฏ๐ข๐ญ ๐๐ฏ๐ต๐ฆ๐ณ๐ฏ๐ข๐ญ ๐๐ฆ๐ท๐ฆ๐ฏ๐ถ๐ฆ ๐๐ฐ๐ฅ๐ฆ (NIRC). However, the Court of Tax Appeals (CTA) ruled in Maricelโs favor.
Affirming the CTA, the SC emphasized that the NIRC, a general tax law, did not expressly repeal the specific tax exemption granted by RA 6426, a special law. The Court clarified that a general law cannot override or revoke a special law without a clear and explicit repeal provision.
Read the full text of the Press Release at https://sc.judiciary.gov.ph/sc-foreign-deposit-accounts-exempt-from-estate-tax/
Read the full text of the Decision at https://sc.judiciary.gov.ph/262092-commissioner-of-internal-revenue-vs-estate-of-mr-charles-marvin-romig-represented-by-its-sole-heir-mrs-maricel-narciso-romig/
Copying of this content is subject to the SC PIOโs Credit Attribution Policy: https://sc.judiciary.gov.ph/credit-attribution-policy/
