BIR Ruling [DA-208-98]

May 27, 1998 BIR RULING [DA-208-98] Ever Sun Development Ltd. 2/F King's Court Bldg. I 2129 Chino Roces Avenue Makati City Attention: Mr . Kevin Ching VP-Treasury/Accounting Gentlemen : This refers to your letter dated February 16, 1998 requesting for a confirmation of your opinion that for each of your importations covered by documents against acceptance and trust receipt, a documentary stamp tax shall be collected only once upon the acceptance of bills of exchange or draft, and that there shall be more imposition of documentary stamp tax on the payment of the bills of exchange and trust receipt. cdtech It is represented that relative to your importations which are covered by documents against acceptance and trust receipt which are facilitated by PCIBank, you are being charged twice or thrice for documentary stamp tax; that you are of the opinion that the documentary stamp tax should be collected only upon acceptance of the bill of exchange for each importation, although involving a series of steps (i.e., acceptance of bills of exchange, payment of bill of exchange, execution of trust receipts), constitutes a single taxable transaction, hence, the privilege of importing such goods is subject only to one documentary stamp tax; and that it is well-settled jurisprudence that a documentary stamp tax is an excise tax which is imposed on the privilege to enter into a transaction, which in this case, is the privilege to import goods into the country. In reply, please be informed that pursuant to Section 173 of the Tax Code, as amended, a documentary stamp tax is a tax on documents, instruments and papers evidencing the acceptance, assignment, sale or transfer of an obligation right or property incident thereto whereby both the person issuing and the person to whom the document is issued may be made liable for the tax. It is an excise tax because it is imposed on the privilege to enter into a transaction. Under Section 7 of Revenue Regulations No. 9-94, where a loan agreement and a promissory note are simultaneously issued and executed, the loan having been secured, only one DST shall be imposed on either document, whichever will yield a higher tax. On the basis of the foregoing facts and provisions of the Tax Code of 1997, your opinion to the effect that only one documentary stamp tax should be collected upon the acceptance of bills of exchange or draft and that there shall be no more imposition of documentary stamp tax on the payment of the bills of exchange and execution of trust receipts pursuant to Section 7 of Revenue Regulations No. 9-94, is hereby confirmed. (BIR Ruling No. 84-97 dated July 29, 1997) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, this ruling shall be considered null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)