Section 2
SECTION 2. Subject to such regulations as may be promulgated by the Central Bank, depository banks qualified by the Monetary Board to function under an expanded foreign currency deposit system may obtain foreign currency loan from, and may conduct foreign currency transactions with, non-residents, offshore banking units in the Philippines and other depository banks under said expanded system. The net income from such foreign currency transactions shall be subject to a five percent (5%) tax which shall be in lieu of all taxes on said transactions, except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation of the Monetary Board, to be subject to the usual income tax payable by banks. Interest income from foreign currency loans granted by such depository bank under said expanded system to residents (other than offshore banking units in the Philippines or other depository banks under the expanded system) shall be subject to a ten per cent (10%) withholding tax as a final tax. Income of non-residents not engaged in trade or business in the Philippines from foreign currency loans to depository banks under the expanded system shall be exempt from income tax.