THE SUPREME COURT has ruled that foreign currency deposit accounts are exempt from estate tax under Republic Act (RA) No. 6426, or the Foreign Currency Deposit Act of the Philippines.
In a decision written by Associate Justice Ramon Paul L. Hernando, the Court’s First Division upheld the estate of Charles Marvin Romig’s claim for an estate tax refund.
Mr. Romig, an American national residing in the Philippines, passed away in 2011, leaving behind his sole heir, Maricel Narciso Romig.
She transferred ownership of his assets, including a dollar deposit account with HSBC, through an Affidavit of Self-Adjudication.
Initially, Ms. Romig excluded the dollar deposit account from the estate tax computation but later paid an additional P4.56 million. She sought a refund, arguing that foreign currency deposits should be exempt from estate tax under RA 6426.
The Commission on Internal Revenue (CIR) rejected her claim, asserting that the 1997 National Internal Revenue Code (NIRC) had removed the tax exemption for foreign currency deposits.
However, the Court of Tax Appeals ruled in favor of Ms. Romig.
The High Court affirmed the lower court’s decision, saying that the NIRC, as a general tax law, did not explicitly repeal the specific tax exemption provided by RA 6426. The Court clarified that a general law cannot override a special law without a clear and express repeal provision.
RA 6426, enacted in 1974, was specifically designed to encourage foreign investments and deposits by exempting foreign currency accounts from all taxes. — Chloe Mari A. Hufana
