Exemption of the Ship Mortgage from Documentary Stamp Tax

August 9, 1990 BIR RULING NO. 147-90 195 068-83 147-90 Gentlemen : This refers to your letter dated June 8, 1990 requesting in behalf of your client, The HongKong and Shanghai Banking Corporation Limited (The Bank), for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Ronda International Shipping S.A. (Ronda) in favor of your client. It is represented that Ronda is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of the Republic of Panama while the Bank is a HongKong Corporation; that to secure a loan, Ronda executed a first preferred ship mortgage in HongKong on the vessel MV "Ronda" in favor of the Bank; that at present, the vessel is being leased by Ronda under a bareboat charter to Plaridel Shipping Corporation, a domestic corporation. In reply, please be informed that the aforesaid First Preferred Ship 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. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner