Internal Revenue Service
Revenue Ruling
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smRev. Rul. 62-56
1962-1 C.B. 272
IRS Headnote
The `Articles of Agreement of the International Bank for Reconstruction and Development' provide that the `transactions' of the Bank shall be immune from all taxation. The Articles of Agreement became part of the statutory law of the United States upon the adoption of the Bretton Woods Agreements Act. Accordingly, certain described transactions of the Bank are exempt from the documentary stamp taxes imposed under Chapter 34 of the Internal Revenue Code of 1954.
Full Text
Rev. Rul. 62-56
Advice has been requested whether certain transactions involving the International Bank for Reconstruction and Development (hereinafter referred to as the Bank) are exempt from the documentary stamp taxes imposed under Chapter 34 of the Internal Revenue Code of 1954.
The Bank is an international organization established for the general purpose of facilitating the financing of the reconstruction and development of productive facilities in the territories of the member nations . The Bank was created pursuant to an agreement signed by the member nations in 1944, which is known as the `Articles of Agreement of the International Bank for Reconstruction and Development' (hereinafter referred to as the Agreement).
Section 9(a) of the Article VII of the Agreement reads as follows:
The Bank, its assets, property, income and its operations and transactions authorized by this Agreement, shall be immune from all taxation, and from all customs duties. The Bank shall also be immune from liability for the collection or payment of any tax or duty.
The United States accepted membership in the Bank under the authority of the `Bretton Woods Agreements Act,' 22 U.S.C. 286.
Section 11 of the Bretton Woods Agreements Act reads, in part, as follows:
The provisions of * * * Article VII, sections 2-9, both inclusive, of the Articles of Agreement of the Bank shall have full force and effect in the United States * * * upon the acceptance of membership by the United States in, and the establishment of, the * * * Bank.
The following questions, relative to the effect of section 9(a) of Article VII of the Agreement on documentary stamp taxes imposed under Chapter 34 of the Code, have been submitted to the Internal Revenue Service:
(1) Is the stamp tax on issuance of certificates of indebtedness, imposed by section 4311 of the Code, applicable to the issuance to the Bank, or upon its order, of the bonds of nongovernmental corporate borrowers, where delivery is made to the Bank within the United States?
(2) Is the stamp tax on the sale or transfer of certificates of indebtedness, imposed by section 4331 of the Code, applicable to the subsequent sale or transfer by the Bank of bonds described in (1) above?
(3) Is the stamp tax on conveyances, imposed by section 4361 of the Code, applicable to purchases or sales of realty in the United States by the Bank?
(4) Is the stamp tax on policies issued by foreign insurers, imposed by section 4371 of the Code, applicable with respect to policies of insurance, indemnity bonds or annuity contracts, issued (in a transaction to which the Bank is a party) to or for, or in the name of, any person who deals with the Bank as a participant in the transaction?
Section 4311 of the Code imposes a documentary stamp tax on all certificates of indebtedness issued by a corporation.
Section 4331 of the Code imposes a documentary stamp tax on each sale or transfer of any certificate of indebtness issued by a corporation.
Section 4361 of the Code imposes a documentary stamp tax on each deed, instrument, or writing by which any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his or their direction, when the consideration or value of the interest or property conveyed (exclusive of the value of any lien or encumbrance remaining thereon at the time of sale) exceeds $100.
Section 4371 of the Code imposes a documentary stamp tax on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer.
The activities described in the four inquiries detailed above are considered to be `transactions' of the Bank, within the meaning of section 9(a) of the Article VII of the Agreement. Through the adoption of the Bretton Woods Agreements Act, the Agreement became part of the statutory law of the United States. Accordingly, the transactions described in (1) through (4) above, where otherwise authorized by the Agreement, are exempt from all stamp taxes imposed under Chapter 34 of the Code, and no party to such transactions is liable for any of the stamp taxes imposed by Chapter 34. See Revenue Ruling 62-55, page 188, this Bulletin, for a related conclusion with respect to the retailers and the manufacturers excise taxes.
This ruling applies with equal effect to the transactions of certain other international organizations, as follows:
Inter-American Development Bank
International Development Association
International Finance Corporation
International Monetary Fund
The agreements establishing these organizations contain provisions substantially similar to section 9(a) of Article VII of the Agreement in the instant case, and the agreements have been made part of the statutory law of the United States.