DST Exemption of Ship Mortgage Executed Abroad

August 9, 1988 BIR RULING NO. 373-88 195 068-83 373-88 Gentlemen : This refers to your letter dated June 16, 1988 requesting in behalf of your client, Banque International de Paris (Villa) Limited ("BIP"), for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Pacific United, Inc. ("PUI") in favor of your client. It is represented that PUI is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of the Republic of Liberia, while your client, BIP, is also a non-resident foreign corporation organized and existing under the laws of the Republic of Vanuatu; and that to secure a loan, PUI executed in New York, U.S.A., a first priority naval mortgage on the vessel MV "Masfield". In reply, please be informed that the aforesaid First Priority Naval 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, being an excise tax, is applicable only to transactions effected and consummated within the Philippines. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner