Extension of Trust Receipts on Your Imported Raw Materials

December 14, 1989 BIR RULING NO. 256-89 195; 198 000-00-256-89 Gentlemen : This refers to your letters dated August 25 and September 25, 1989 requesting for a ruling as to whether the extension of trust receipts on your imported raw materials placed under trust is still subject to the documentary stamp tax. It is represented that on March 2, 1989, you opened a Letter of Credit with the China Banking Corporation (CBC) under L/C No. 89/0109 and Account No. 52287 in the amount of $272,000.00 at the rate of P21.4570 or P5,836,304.00; that CBC charged you, among others, documentary stamp tax in the amount of P8,754.00; that on July 3, 1989, CBC debited your Account No. 52287 under the same L/C No. 89/0109 and charged you documentary stamp tax in amount of P2,595.00 on the Trust Receipt of P2,594,999.54; that on August 28, 1989, CBC again charged you for documentary stamp tax affixed on the Trust Receipt in the amount of P2,335,499.54 under the same Account No. 52287, L/C No. 89/0109 for P2,335.00. In short, on the two extensions of your trust receipt in the total amount of P4,930,499.00 under the same Account No. 52287 and L/C No. 89/0109, you were made to pay documentary stamp tax in the total amount of P4,930.60 although you have already paid documentary stamp tax in the amount of P8,754.00 on the principal trust receipt of P5,836,304.00. In reply, please be informed that trust receipts are subject to the documentary stamp tax under Section 195 of the Tax Code, as mortgages. (Sec. 156, Regulations No. 26 or the Documentary Stamp Tax Regulations) The extension of the trust receipt agreement not exceeding the original period as allowed by the Central Bank under MAAB No. 16 dated September 25, 1981 is not subject to the documentary stamp tax. Accordingly, if the trust receipt agreement extends after the original period, such extension is considered continuance of the agreement; hence, subject to the documentary stamp tax at the same rate as that imposed on the original instrument. (Sec. 198, Tax Code) cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner