BIR Ruling [UN-130-95]

March 31, 1995 BIR RULING [UN-130-95] MEMORANDUM FOR Acir Melchor S. Ramos Collection Service This refers to your memorandum dated January 24, 1995 addressed to ACIR Jaime D. Gonzales (Financial and Administrative Service) requesting for clarification on whether a foreign demand draft is subject to documentary stamp tax and whether it could be charged to the Bureau of Internal Revenue. cdtech Records show that a Metropolitan Bank and Trust Company (Metro Bank) Taipei Branch, Taipei, Taiwan Branch Demand Draft No. 12773 dated December 20, 1994 amounting to US$69,821.34 was drawn abroad payable to "The Commissioner, Bureau of Internal Revenue of the Philippines" covering remittance of the 1994 income taxes collected by the Manila Economic & Cultural Office (MECO) in Taiwan; that said demand draft was forwarded by the Revenue Accounting Division to the Special Collecting Officer (SCO) for the issuance of official receipt; that the SCO, however, did not acknowledge the demand draft because according to her, documentary stamp tax amounting to more than P3,000.00 has to be paid; and that this was relayed to MECO but the latter believed that it is not liable to pay the DST because it is merely a collection agent of the BIR and not a taxpayer. In BIR Ruling No. 64-90 dated April 18, 1990, this Office opined that "bank drafts drawn abroad but cashed or negotiated with local banks are subject to the documentary stamp tax in accordance with Section 32 of Regulations No. 26. On the other hand, when any bill of exchange, or order for the payment of money drawn in a foreign country but payable in this country is presented for acceptance or payment, there must be affixed upon acceptance or payment a documentary stamp tax of P0.30 on each P200.00 or fractional part thereof imposed by Section 181 of the Tax Code (Section 46, Regulations No. 26). However, although the issuers of the bank drafts are the ones directly liable for the tax, the government (BIR), as acceptor of the said bank drafts, may be held liable for payment thereof, pursuant to Section 173 of the Tax Code, as amended." In view thereof, the documentary stamp tax on the Metro Bank (Taipei Branch, Taipei, Taiwan) Demand Draft No. 12773 dated December 20, 1994 amounting to US$69,821.34 drawn abroad in favor of the BIR Commissioner covering remittance of 1994 income taxes collected by the MECO in Taiwan could be charged to the BIR, as the acceptor of the said bank draft pursuant to Section 173, in relation to Section 181, both of the Tax Code, as amended. ALICIA P. CLEMENO Assistant Commissioner Legal Service By: ALICIA L. TOMACRUZ Head Rev. Executive Asst. (Legal)