BIR Ruling [DA-360-98]

August 4, 1998 BIR RULING [DA-360-98] Centennial Bank 15/F, Prestige Tower Emerald Avenue, Ortigas Center Pasig City Attention: Mr. Manuel C. Mendoza President & CEO This refers to your letters dated June 5 and 23, 1998 requesting for a ruling exempting from the documentary stamp tax the issuance of original shares of stock to your stockholders. IAcTaC Documents submitted show that you are a domestic banking company duly registered with the Securities and Exchange Commission under SEC Registration No. A1998-1978 dated February 10, 1998; that you are authorized to operate as a thrift bank pursuant to a Certificate of Authority issued by the Bangko Sentral ng Pilipinas (BSP) on February 13, 1998; and that you started to operate as such on February 18, 1998. In reply, please be informed that Section 17 of Republic Act No. 7906, otherwise known as the Thrift Banks Act of 1998, provides viz: cSDIHT "SEC. 17. "All thrift banks whether created or organized under this Act or in operation as of the date of effectivity of this Act, shall be exempt from payment of all taxes, fees and charges of whatever nature and description, except corporate income taxes, and local taxes, fees and charges for a period of five (5) years, counted from the date of commencement of operations for thrift banks created under this Act and from the date of effectivity of this Act for existing thrift banks". Based on the foregoing, you are exempt from the documentary stamp tax imposed under Section 175 of the Tax Code of 1997 on the original issuance of shares of stock to the stockholders. However, Section 173 of the same Code provides that, "whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto, who is not exempt shall be the one directly liable for the tax". Accordingly, since you are exempt from the documentary stamp tax, the stockholders are the ones liable for the payment of the documentary stamp tax due on said certificates of stock issued by you. DacASC Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue