BIR Ruling

April 17, 1975 Mr. Gerardo B. Macaraeg Bausa, Ampil & Suarez Law Office Rm. 501-505 Madrigal Building Escolta, Manila S i r : This refers to your letter dated April 10, 1975, stating as follows: "In behalf of certain clients who are affected by the same, we are respectfully requesting your goodself for a clear-out and categorical ruling on the following matters, to wit: "(a) Certain Filipino and foreign investors have entered into a joint venture agreement for the purpose of establishing a domestic corporation to engage in a tourist-oriented project. The joint venture calls for massive equity investments on the part of the foreign partners to be remitted to the new joint venture corporation in the Philippines in the form of United States Dollars. The United States Dollars to be remitted to the Philippines would be in the form of foreign drafts of other negotiable instruments requiring the payment of documentary and science stamps under the Philippine Internal Revenue Code. In this connection, the simple question is: In the absence of an agreement in this particular point, who is required to pay the documentary and science stamps on the foreign exchange amounts remitted to the Philippines by way of equity investments in a new domestic joint venture corporation (i.e., Is it the remitting foreign investor or the receiving joint venture corporation)? "(b) In the absence of an agreement, who is required to pay the documentary and science stamps for the initial issuance of the certificates of stock by a domestic corporation to its respective stockholders. (i.e. Is it the domestic corporation issuing the certificates of stock or the corresponding stockholders receiving such certificates of stock)?" In reply thereto, I have the honor to inform you as follows: 1. The answer to Query No. 1 is that the new joint venture corporation in the Philippines which is the recipient of the foreign drafts of other negotiable instruments is the one liable for the payment of the corresponding documentary and science stamp taxes due thereon. 2. As to Query No. 2, the new joint venture corporation should affix the proper amount of documentary and science stamps on the certificates of stocks issued by it to the stockholders. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."