Exemption from Payment of DST on the First Preferred Mortgage Executed Abroad

February 10, 1988 BIR RULING NO. 030-88 195 068-83 030-88 Gentlemen : This refers to your letter dated January 25, 1988 in effect requesting exemption from payment of documentary stamp tax on the First Preferred Mortgage executed abroad between Kamagong Shipping Inc. and Po Sang Bank Limited. It is represented that you are a domestic corporation engaged in the bareboat chartering of vessel under PD 866 as amended by PD 1711; that on December 30, 1987, you acquired a bulk carrier MV Kamagong which was later renamed MV Mahogany; that the owner of said vessel, Kamagong Shipping, Inc., a Panama registered company, engaged your services to register in the Philippines the said First Preferred Mortgage of vessel in favor of Po Sang Bank Limited; that the said First Preferred Mortgage was executed by the parties in HongKong and duly authenticated by the Vice-Consul of Panama also in HongKong; that when you presented the said document for annotation of the mortgage in the Temporary Certificate of Philippine Registry (TCPR) of the vessel, the Philippine Coast Guard (PCG) is subjecting the same to documentary stamp tax imposed under Section 195 (formerly Section 208) of the Tax Code as amended. cdtech In reply, please be informed that the aforesaid First Preferred Mortgage is not subject to the documentary stamp tax imposed by Section 195 of the Tax Code as amended because being an excise tax it is applicable only to transactions effected and consummated within the Philippines but which is not so in this case. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner