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STAMP TAX RELATING TO AUTHENTICATION, CUSTODIAN AND UNDERWRITING SERVICE CONTRACTS
In April 1999, the Ministry of Finance (MOF) issued an interpretation regarding stamp taxes on authentication, custodian and underwriting service contracts in which banks are engaged by others for rendering of services relating to corporate stock offerings. The authentication service contracts are contracts entered into by the authentication institution to perform examination and registration according to regulations issued by the MOF and the Ministry of Economic Affairs such contracts are not of the character of an agreement for a hire of work, and therefore do not require payment of a stamp tax. "Custodian service contracts" and "securities underwriting service contracts" are contracts which specifically designate the scope of the work to be performed by the banks and stipulate the payment of remuneration pending on its completion. Such contracts fall within the scope of work for hire contracts and accordingly are taxable for stamp tax purposes.