SC: Foreign Currency Deposit Accounts Exempt from Estate Tax Under RA 6426 The Supreme Court (SC) has ruled that foreign currency deposit accounts are exempt from estate tax under Republic Act No. 6426 (RA 6426), also known as the Foreign Currency Deposit Act of the Philippines. In a decision penned by Associate Justice Ramon Paul L. Hernando, the SC’s First Division upheld the claim for an estate tax refund filed by the estate of Charles Marvin Romig, an American national residing in Puerto Galera, Oriental Mindoro. Case Background Charles Marvin Romig passed away in 2011 without a will. His sole heir, Maricel Narciso Romig, inherited his properties, including a dollar deposit account with the Hongkong and Shanghai Banking Corporation (HSBC) Limited Makati Branch. She transferred ownership through an Affidavit of Self-Adjudication. Initially, Maricel excluded the dollar deposit account from the estate tax computation but later paid an additional PHP 4.56 million to cover it. She later sought a refund, arguing that foreign currency deposits are tax-exempt under Section 6 of RA 6426. BIR’s Position and Court Rulings The Commissioner of Internal Revenue (CIR) denied the refund, claiming that the tax exemption had been revoked by the 1997 National Internal Revenue Code (NIRC). However, the Court of Tax Appeals (CTA) ruled in Maricel’s favor. The SC affirmed this ruling, emphasizing that the NIRC, a general tax law, cannot override RA 6426, a special law, unless there is an explicit repeal. Since the NIRC only contains a general repealing clause, the tax exemption under RA 6426 remains in effect. Why It Matters RA 6426, enacted in 1974, was designed to encourage foreign investments by ensuring that foreign currency deposits remain tax-exempt. The NIRC of 1997 governs taxation in general, but it does not specifically repeal the exemption granted by RA 6426. With this decision, the SC has reaffirmed that foreign currency deposits remain shielded from estate tax, reinforcing the country’s commitment to protecting such investments. (Courtesy of the SC Office of the Spokesperson)