DST Exemption on First Priority Naval Mortgage Executed in Hong Kong

October 14, 1988 BIR RULING NO. 497-88 195 068-83 497-88 Gentlemen : This refers to your letter dated September 14, 1988 requesting in behalf of your client, Bangue 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 Gibson Shipping Limited (hereinafter referred to as Gibson) in favor of your client. It is represented that Gibson 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 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, Gibson executed in Hong Kong a first priority naval mortgage on the vessel "Pacific Dreamer" in favor of the Bank; and that at present, the vessel is being leased by Gibson 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) cdtech Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner