Bill of Exchange Stamp Duty

larryBacon · Post by **larryBacon** » Wed Oct 15, 2003 1:00 am

For those countries where stamp duty or equivalent is applied to bills of exchange, if a B/E is received by a bank without evidence of payment of such duty, is it acceptable and/or discrepant

(a) under UCP ?
(b) under URC ?

Laurence

NigelHolt · Post by **NigelHolt** » Thu Oct 16, 2003 1:00 am

Laurence,

I cannot see that the UCP or URC are of any relevance. In the case of a credit, I would take it that the law applicable to the credit would determine this. In the case of a collection, I would imagine that the law under which the presenting bank is operating would determine this.

Jeremy

PGauntlett · Post by **PGauntlett** » Thu Oct 16, 2003 1:00 am

Such matters are usually only of concern to forfaiters and, generally, they will not purchase b/e's without ensuring that the bil is correctly stamped. If there is any doubt as to whether stamp duty is payable they will check with the obligor

Phil

NigelHolt · Post by **NigelHolt** » Fri Oct 17, 2003 1:00 am

Phil,

I notice you've used the term 'obligor'. Do you mean the acceptor? I ask because I recently reviewed a glossary where this term was used and I could not see why the BEA 1882 term 'acceptor' was not used instead.

Jeremy

larryBacon · Post by **larryBacon** » Fri Oct 17, 2003 1:00 am

Jeremy,

we have to make a distinction here between legal (tax gathering) requirements and compliance with UCP or URC.
If a drawer issues a draft without payment of stamp duty, he may not be complying with local law, but does this invalidate the draft for the purposes of UCP or URC ? (a) in the same country (b) other countries.

If the draft is drawn in a currency foreign to where it is drawn, the draft can only take effect in another jurisdiction. Does this change the requirement for payment of local stamp duty where it is drawn ?

Laurence

NigelHolt · Post by **NigelHolt** » Fri Oct 17, 2003 1:00 am

Laurence,

1. I appreciate the distinction.
2. As I’ve said I cannot see that the UCP or URC are of any relevance. (Also I do not see how one can talk of documents ‘complying’ with URC, when URC contains no provisions regarding the requirements of the contents of documents.)
3. UCP is not the sole determinant of documents compliance. I could see circumstances where the law of a country MAY be such as to make non-payment of stamp duty a reason for refusal. However, it would all depend on the provisions of the particular act/regulations etc. However, I accept it would be most unusual.
4. I do not agree that if the draft is drawn in a currency foreign to where it is drawn, the draft can only take effect in another jurisdiction. As to its impact on the requirement for payment of local stamp duty, that will presumably be determined by what the local regulations say.

Sorry I cannot be more helpful.

Jeremy

[edited 10/17/03 4:10:35 PM]

PGauntlett · Post by **PGauntlett** » Fri Oct 17, 2003 1:00 am

Jeremy,

I was using the term obligor (as cribbed from the London Forfaiting Co procedures manual) as a catch-all expression for acceptor/avalisor of b/e or issuer/avalisor of prom note.

Phil

larryBacon · Post by **larryBacon** » Wed Oct 22, 2003 1:00 am

Jeremy,

the URC determines a chain of events including the route for transmission of documents usually through more than one country and therefore more than one legislature. It is incumbent for each bank to comply with local laws, but I wondered whether such banks would be required to take cognisance of foreign laws e.g. relating to the payment of stamp duties, particularly where that bank intends enforcing payment of an accepted draft. In other words, if the draft does not indicate payment of local stamp duty in the country of origin, could it be contested as invalid in the country of payment ?

Laurence