Sy is BAP’s new open market team head

International Exchange Bank (iBank) president Ramon Sy has been appointed as head of the open market committee of the 40-member Bankers Association of the Philippines (BAP). He replaces Eric Cruz of Deutsche Bank. Bank sources said that heading the open market committee is usually the stepping stone for the BAP presidency.

Rizal Commercial Banking Corp. (RCBC) vice chairman Cesar EA Virata is presently BAP president. Earlier, Citibank was removed as member of its board of directors reportedly for its decision to settle its foreign currency deposit units (FCDU) tax with the Bureau of Internal Revenue (BIR).

Citibank reportedly paid P6 billion of its tax obligation covering a five-year period from 1998 up to 2003, including the controversial FCDU tax. Sources said that the action "enraged some members of the board of BAP." "Citibank paid under the single tax policy."

"It has virtually weakened the position of the BAP. The Citibank payment is an admission that BIR interpretation is correct, and the industry was wrong," the same sources said.

The banking industry has been holding protracted discussion over the FCDU tax issue, which involves at least P30 billion covering the period 1998 to 2003. The issue has become complicated as there seems to be several interpretation of the ruling on foreign currency. Some foreign banks has implied that the FCDU tax issue could force them to take drastic actions. They refused to expound. Under the National Internal Revenue Core (NIRC), FCDUs are exempt from all taxes. However, this privilege or the phrase "exempt from all taxes" was apparently missing from minutes of the Congressional committee hearing that is deliberating on proposed revisions to the Comprehensive Tax Reform Program of 1997.

Consequently, this overnight resulted in conflicting interpretation with banks maintaining that FDCUs are exempted, specifically on its non-income such as the gross receipts tax and the documentary stamp tax. But, BIR stands otherwise.

FCDU is the second source of foreign currency for the banking system. It grew by 12.56 percent, or from $13.76 billion in 2003 to $15.49 billion.