BIR Ruling No. 180-83

October 11, 1983 BIR RULING NO. 180-83 Gentlemen : This refers to your letter dated January 14, 1982 requesting tax credit for your payments of documentary and science stamp taxes on issuance policies; checks issued on current account; export letters of credit; foreign transactions and promissory notes for the period from January 2, 1980 to June 30, 1981 in the total amount of P367,031.99 because of your tax exemption privilege as a BOI registered enterprise under Republic Act No. 5186 which was extended for another five years beginning January 1, 1980. cdti The records show that the Board of Investments (BOI) granted your company (Filsyn) an extension of 5 years from January 1, 1980 to avail of the exemption from all taxes, except income tax under Section 8(a) of R.A. 5186, subject to the following conditions: (1) that you will acquire full ownership of Lakeview Industrial Corporation, under conditions satisfactory to BOI; (2) that you commit to expand to a world-sized units, as may be mutually agreed with BOI; and (3) that you agree to offer equity in your expanded company to the textile millers, under terms and conditions to be mutually-agreed with BOI; and that the evidence submitted by you show that the total amount of P367,031.99 as documentary and science taxes on the insurance policies issued by various insurance companies and 10 checks issued to your current account, export letters of credit, foreign transactions and promissory notes by various banks were paid by said insurance companies and banks passed on and charged to you by them. In reply, please be informed that the exemption privilege of pioneer enterprise from national internal revenue taxes covers only such direct tax liabilities as may be imposed in connection with the operation of the registered pioneer project and shall exclude such taxes as may be transferred or passed on to the registered enterprise either by business practice or mere contractual arrangement. (Rule XV, Section 6, Rules and Regulations Implementing P.D. No. 1789) In this instant case, the documentary stamp taxes were the direct liabilities of the banks and insurance companies which issued the taxable documents. (Sec. 222, Tax Code) Said taxes were passed on to you either by business practice or contractual arrangement. Such being the case, you cannot claim exemption from the payment of the documentary stamp tax in question paid on said documents. cdtech In view thereof, your instant request for tax credit is hereby denied for lack of legal basis. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue