Publishing Questions Raised and Answers Given on the Interpretation of Certain Provisions of the Tax Code and Revenue Regulations Regarding Documentary Stamp Tax

October 15, 1986 REVENUE MEMORANDUM CIRCULAR NO. 33-86 SUBJECT : Publishing Questions Raised and Answers Given on the Interpretation of Certain Provisions of the Tax Code and Revenue Regulations Regarding Documentary Stamp Tax TO : All Internal Revenue Officers and Others Concerned The following are questions and answers which were discussed in a series of conferences between the BIR Committee on Banks and representatives of the Banker's Association of the Philippines (BAP), the Philippine Association of Finance Companies, Inc. (PAFCI), the Investment Houses Association of the Philippines (IHAP), and the Central Bank of the Philippines. Question 1. Are Treasury Bills subject to DST? If so, at what rate and who is liable? Ans. Effective January 1, 1986, all bonds, debentures and certificate of indebtedness issued by the Government of the Philippines or the government of any province, city or municipality are subject to DST at the rate of P0.20/200.00 or fractional part thereof, pursuant to Section 229 (now Section 193) of the Tax Code. Question 2. Are promissory notes, whether negotiable or non-negotiable subject to DST? If so, at what rate? Ans. All promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation, and on each renewal of any such note is now subject to DST at P0.20/200.00, or fractional part thereof, of the face value of such note. However, non-negotiable promissory notes became subject to DST only beginning October 15, 1984, the effectivity date of P.D. 1959. Prior to such date, non-negotiable promissory notes, as such both in form and substance are not subject to DST. Question 3. Are deposit substitutes subject to DST? If so at what rate? Ans. Deposit substitutes are subject to DST at P0.20/200, or fractional part thereof, of the face value of such note pursuant to Sec. 229 of the Tax Code, as amended by P.D. 1959, now re-numbered as Sec. 193, per P.D. 1994 Question 4. Is the Central Bank, as issuer of CBCI and CB Bills liable for DST? Ans. The Fiscal Incentives Review Board (FIRB) in its Resolution No. 33-85, restored the tax exemption privilege of the Central Bank, effective June 11, 1984. However, Sec. 130 of R.A. No. 265 (Central Bank Charter) States that ". . . Provided, However, that said exemptions shall apply only to such taxes and assessments for which the Central Bank itself would otherwise be liable, and shall not apply to taxes assessments payable by persons or entities doing business with the Central Bank." Corollary to this, Section 186 of the Tax Code provides that "whenever one of the party to the taxable document enjoys exemptions from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable to the tax." In view of the above, the Central Bank is exempt from DST, however, the purchaser or the other party to the CBCI or CB Bills, who is not exempt, is the one liable for DST. All Internal Revenue Officials and others concerned are hereby enjoined to give this Revenue Memorandum Circular the widest publicity possible. BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue