Inter-Office Memo Evidencing Lendings/Borrowings Subject to Documentary Stamp Tax

July 15, 1999 BIR RULING NO. 108-99 180-000-00-108-99 ASB Development Corp. ASB Center 114 Benavidez St.,Legaspi Village 1229 Makati City Attention: Mr . Rolando P . Domingo Sr . Vice President Gentlemen : This refers to BIR Ruling No. 116-98 dated July 30, 1998 issued in your favor, the pertinent portion of which reads as follows: xxx xxx xxx "On the matter of whether or not the inter-office memo covering the advances granted by an affiliate company is subject to documentary stamp tax, it is informed that nothing in Regulations No. 26 (Documentary Stamp Tax Regulations) and Revenue Regulations No. 9-94 states that the same is subject to documentary stamp tax. Such being the case, said inter-office memo evidencing the lendings/borrowings which is neither a form of promissory note nor a certificate of indebtedness issued by the corporation-affiliate or a certificate of obligation, which are more or less, categorized as "securities", is not subject to documentary stamp tax imposed under Sections 180, 174 and 176 of the Tax Code of 1997, respectively. Rather, the inter-office memo is being prepared for accounting purpose only in order to avoid the co-mingling of funds of the corporate affiliates." xxx xxx xxx After a careful restudy of the aforementioned ruling, this Office is of the opinion as it hereby holds that inter-office memo covering the advances granted by a corporation affiliate company, i.e. or inter-office memo evidencing lendings/borrowings is in the nature of a promissory note subject to the documentary stamp tax imposed under Section 180 of the Tax Code of 1997. This modifies BIR Ruling No. 116-98 dated July 30, 1998 insofar as inter-office memo covering the advances granted by a corporation affiliate company, i.e., inter-office memo evidencing lendings/borrowings is concerned which shall be subject to documentary stamp tax imposed under Section 180 of the Tax Code of 1997. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue