BIR Ruling [DA-584-98]

December 29, 1998 BIR RULING [DA-584-98] Embassy of the Republic of Cuba Heart Tower Condominium 11/F Rms. 1103 and 1104 108 Valero Street, Salcedo Village Makati City Attention: Mr . Francisco Ramos Ambassador Gentlemen : This refers to your letter dated July 14, 1998, requesting reconsideration of BIR Ruling No. DA-245-98 holding that the Cuban Embassy is liable for the payment of documentary stamp tax on the sale of its real property located at Forbes Park to a private buyer. You contended that Section 173 of the Tax Code of 1997 is applicable only to Philippine entities or citizens but not to diplomatic missions, envoys or staff members of the Embassy because that is contrary to the Vienna Convention on Diplomatic Relations and the principle of reciprocity; and that the Embassy is not waiving its tax-exempt privileges when it assumed to pay the DST. In reply, please be informed that after a re-study, this Office has arrived at the conclusion that the aforesaid ruling is indeed erroneous. As vendor of the real property in question, the Cuban Embassy is directly liable for the payment of the DST. However, under Article 23 (1) of the Vienna Convention on Diplomatic Relations to which the Philippines is a signatory, the Cuban Embassy is exempt from the payment of documentary stamp tax. The fact that the Contract of Sale contains a provision whereby the Cuban Embassy assumed payment of the documentary stamp tax does not make the latter liable for the tax because the stipulation is contrary to law and public policy, hence, the same is considered to be of no force and effect. Accordingly, since the buyer of the property is not exempt from tax, then he/she shall be the one directly to pay the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. (Section 173, Tax Code of 1997) This revokes BIR Ruling No. DA-245-98 dated June 15, 1998. cd Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue