Exemption of Ship Mortgage from the Documentary Stamp Tax

October 29, 1990 BIR RULING NO. 205-90 195 068-83 205-90 Gentlemen : This refers to your letter dated May 22, 1990 requesting in behalf of your client, Indosuez Asia Limited (Indosuez), a HongKong corporation, for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Buzzard Shipping Limited (Buzzard) in favor of your client. It is represented that Buzzard is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of the Republic of Liberia; that to secure a loan, it executed a first preferred ship mortgage in HongKong on the vessel MV "Handy Sailor" in favor of Indosuez; that at present, the vessel is being leased by Buzzard under a bareboat charter to Kaunlaran 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. cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner