Exemption of a Ship Mortgage from the Documentary Stamp Tax

February 13, 1989 BIR RULING NO. 017-89 195 068-83 017-89 Gentlemen : This refers to your letter dated October 7, 1988 requesting in behalf of your client, The Hong Kong and Shanghai Banking Corporation, for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Malaren Corporation in favor of your client. cdta It is represented that Malaren Corporation is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of the Republic of Liberia while your client is also a non-resident foreign corporation organized and existing under the laws of Hong Kong; that to secure a loan, Malaren Corporation executed in Hong Kong a first priority naval mortgage on the vessel MV "Philippine Sampaguita" in favor of the bank; and that at present, the vessel is being leased by Malaren Corporation under a bareboat charter to Manila Bulk Carriers, Inc., a domestic corporation. In reply, please be informed that the aforesaid First Priority Naval Mortgage being executed abroad is not subject to the documentary stamp tax imposed by Section 195 of the Tax Code. This is in accordance with the rulings previously issued by this Office to the effect that the documentary stamp tax, being an excise tax, is applicable only to transactions effected and consummated within the Philippines. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner