DST Exemption on Mortgage Executed Outside the Philippines

August 15, 1988 BIR RULING NO. 388-88 193 068-83 388-88 Gentlemen : This refers to your letter dated May 3, 1988 requesting in behalf of your client, Magsaysay Lines, confirmation of your opinion to the effect that a mortgage executed outside the Philippines is not subject to the documentary stamp tax. It is represented that Transportes Navieros, Inc., one of the principals of your client, would like to bareboat charter, "MV Transocean Merchant", a vessel owned by New Gallant Panama S.A. (owner), a Panamanian corporation; that said vessel is the subject of a First Preferred Ship Mortgage executed in HongKong between the owner (New Gallant Panama S.A.) and Indosuez Asia Ltd. (Mortgagee) as security for a loan which was duly registered and annotated in the Panama Registry; and that the Philippine Coast Guard (PCG), prior to any annotation of the duly executed and registered Panamanian mortgage, would ask for proof of payment of documentary stamps on the first preferred mortgage as a matter of procedure. In reply, please be informed that since the aforesaid First Preferred Ship Mortgage was executed in HongKong, the same is not subject to the documentary stamp tax imposed under Section 193 of the Tax Code, as amended. This is so because a documentary stamp tax, being an excise tax, is applicable, only to transactions effected and consummated within the Philippines. (BIR Ruling No. 068-93) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner