Request for Exemption from Payment of Documentary Stamp Taxes Based on Statutory Exemption and Previous BIR Rulings

May 27, 1986 BIR RULING NO. 067-86 186 000-00 067-86 Gentlemen : This refers to your letter dated April 29, 1985 stating that you are registered with the Board of Investments in accordance with the provisions of P.D. No. 1789 otherwise known as the Omnibus Investments Code as a preferred pioneer enterprise for the production/manufacture/raising of integrated steel project; that you are exempt from all internal revenue taxes except income tax on a graduated basis; and that you have entered into various deeds of sale and mortgages, as vendee and mortgagee, respectively, whereby you assumed payments, among others, of documentary stamp taxes. You now request for exemption from payment of the documentary stamp taxes on the basis of the said statutory exemption and previous rulings of this Office on the matter. In reply, I have the honor to inform you that under Section 186 (formerly Section 222) of the Tax Code, as amended by P.D. No. 1994 which took effect on January 1, 1986, whenever one party to the taxable document enjoys exemption from the documentary stamp tax, the other party thereto who is not exempt shall be the one directly liable for the tax. This amendment revokes the rulings cited by you to the effect that the documentary stamp tax is paid indifferently by either party, and accordingly, the party assuming payment of said taxes becomes directly liable therefor. Hence, as the party assuming payment is tax-exempt, the document becomes exempt from documentary stamp tax. In other words, under the amendment, such assumption of tax liability by the tax-exempt party is no longer allowed, in which case, the other party in the document who is not exempt becomes liable. In the light of the foregoing, the vendors and mortgagors who are not tax exempt, in the Deeds of Sale and Mortgages entered by you are subject to the documentary stamp tax due on the said documents. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner