Documentary Stamp Tax — Burden of Payment

December 27, 1979 BIR RULING NO. 137-79 Documentary stamp tax burden of payment This refers to your letter dated March 1, 1979 requesting a ruling and/or confirmation that the insurance policies issued by you to the International Rice Research Institute (IRRI) are exempt from the payment of documentary stamp tax pursuant to Republic Act No. 2707 which provides: "Section 1. The provisions of existing laws or ordinances to the contrary notwithstanding, the International Rice Research Institute, or its successors, shall be exempt from the payment of gifts, franchise, specific, percentage, real property, exchange, import, export, and all other taxes provided under existing laws or ordinances. This exemption shall extend to goods imported and owned by the International Rice Research Institute to be leased or used by members of its staff." aisa dc In reply, I have the honor to inform you that pursuant to Section 222 of the Tax Code of 1977, the documentary stamp tax due on documents shall be paid by the person making, signing, issuing, accepting or transferring the same which provision of law was interpreted by the Court of Tax Appeals as placing the burden of paying the tax upon the parties to the contract and leaves the tax to be paid indifferently by either party (Sta. Clara Lumber Co., Inc. versus Jose Aranas, C.T.A. Case No. 502, June 12, 1959). Thus, where one party to the contract is exempt from said tax, the other party, who is not tax exempt, shall be liable therefor. Since the insurance company, the other party to the contract and the one issuing the insurance policy is not exempt from said tax, then it is the one liable therefor, pursuant to Section 222 of the Tax Code.