DST Exemption on the Ship Mortgage Executed Abroad by Higginsville Investment Limited

October 11, 1988 BIR RULING NO. 488-88 195 068-83 488-88 Gentlemen : This refers to your letter dated September 14, 1988 requesting in behalf of your client, Banque Nationale de Paris (Vila) Limited (hereinafter referred to as Bank), for a ruling exempting from the documentary stamp tax the ship mortgage executed abroad by Higginsville Investment Limited (hereinafter referred to as Higginsville) in favor of your client. It is represented that Higginsville is a non-resident foreign corporation not doing business in the Philippines and organized and existing under the laws of the Republic of the Liberia while the Bank is also a non-resident foreign corporation organized and existing under the laws of the Republic of Vanuatu; that to secure a loan, Higginsville executed in Hong Kong a first priority naval mortgage on the vessel "Pacific Minder" in favor of the bank; and that at present, the vessel is being leased by Higginsville under a bareboat charter to Kasunduan Shipping Corporation, a domestic corporation. In reply, please be informed that since the aforesaid first priority naval mortgage was executed in Hong Kong, the same is not subject to the documentary stamp tax imposed under Section 195 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. 068-83) Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner