Exemption of a Ship Mortgage from the DST

August 8, 1989 BIR RULING NO. 164-89 195 068-83 164-89 Gentlemen : This refers to your letter dated May 26, 1989 requesting in behalf of your client, Banque Nationale de Paris (Vila) Limited, for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Ratu Shipping Co., S.A. in favor of your client. cdta It is represented that Ratu Shipping Co., S.A. is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of Panama while Banque Nationale de Paris (Vila) Limited is also a non-resident foreign corporation incorporated under the laws of the Republic of Vanuatu; that the former is the owner of the vessel M/V "Hudson Trader"; and that to secure a loan, it executed in Hong Kong a First Preferred Panamian Mortgage (copy attached) on the said vessel in favor of your client. In reply, please be informed that the aforesaid First Preferred Panamian Mortgage, being executed in HongKong, is not subject to the documentary stamp tax imposed by Section 195 of the Tax Code. This is in consonance 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. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner