BIR Ruling [DA-440-03]

December 4, 2003 BIR RULING [DA-440-03] 115-96; 026-98 Atty . Rolando P . Nonato 3rd Floor, Tulips Center A. S. Fortuna Street Mandaue City S i r : This refers to your letter dated October 11, 1999 requesting for a confirmation of your opinion that the tax credit certificate issued to your client, Merasenko Corporation by the Department of Finance (DOF) can be used in payment of its documentary stamp tax liabilities arising from its issuance of its shares of stock. It is represented that your client filed a written request dated September 22, 1999 with the DOF requesting for issuance of a Tax Debit Memo (TDM) in the amount of P140,000.00 for payment of the documentary stamp tax on the original issuance of shares with a total par value of P14,000,000.00; that your client's tax credit certificate No. SN 015028 still containing a net amount of P1,059,937.15 was duly submitted; and that on October 11, 1999, you received a fax message from the Executive Director of the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the DOF informing you that the TDM you requested cannot be issued because there is an issue as to whether TCC may be used to pay DST. In reply, please be informed that pursuant to Section 204(C) of the Tax Code of 1997, "a Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue tax, excluding withholding taxes, for which the taxpayer is directly liable. . . .." Furthermore, Section 2.3 of RMO No. 86-98 dated November 10, 1998 explicitly provides that: "Kinds of internal revenue taxes against which a TCC may be applied in payment; Exception. Subject to the provisions of the preceding paragraphs, any TCC duly issued by the Commissioner of Internal Revenue, or his duly authorized representative, under the provisions of . . . may be used by its grantee in payment of his internal revenue taxes, value-added tax, percentage taxes, excise taxes and documentary stamp taxes, except his withholding tax liability." In conclusion, this Office reiterates its stand that the utilization of TCCs in payment of tax liabilities is proper, except only in the following cases: 1. Payment or remittance for any kind of withholding tax by taxpayers; 2. Payment of a tax reduced by way of compromise authorized under Section 204 of the Tax Code; and 3. Payment of deficiency taxes arising from confidential information (RMO 20-91) Accordingly, your request that the tax credit certificate issued to your client, Merasenko Corporation by the DOF can be used in payment of its documentary stamp tax liabilities arising from its issuance of its shares of stock is hereby confirmed. 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, then this ruling shall be considered null and void. EAcHCI Very truly yours, Commissioner of Internal Revenue By: By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group