New Tax Rates on Stock Transfers
This article discusses the tax involved in the transfer of stocks which are listed and traded through the Local Stock Exchange.
In stock transfers, the tax to be paid is called a Percentage Tax, which is a business tax imposed on stock transfer transactions such as the sale, barter, exchange or other disposition of shares of stocks.
With the passage of the Republic Act No. 10963, or otherwise known as ‘the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the rate of percentage tax on stock transfers was increased.
Who are required to file and pay the percentage tax on stock transfers?
Every stock broker who effected a sale, barter or exchange of shares of stock listed and traded through the local stock exchange, other than the sale by a dealer in securities, which tax shall be paid by the seller/transferor, is required to file and pay the percentage tax on such transaction.
What is the rate of the percentage tax on the transfer of stocks which are listed and traded through the Local Stock Exchange?
Old Tax Rate on the transfer of stocks of publicly listed companies
Before the passage of the TRAIN Law, the percentage tax on the sale, barter or exchange of shares of stock listed and traded through the local stock exchange was one-half of one percent (1/2 of 1%). Now, there is a new rate and it has been increased.
New Tax Rate on the transfer of stocks of publicly listed companies
Under Section 127 of the TRAIN Law, the tax rate for stock transfers shall be six-tenths of one percent (6/10 of 1%) of the gross selling price or gross value in money of the shares of stock.
The pertinent provision of the TRAIN Law provides, to wit:
“SEC. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange or through Initial Public Offering.
(A)Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock Exchange. – There shall be levied. assessed and collected on every sale. barter, exchange. or other disposition of shares of stock listed and traded through the local stock exchange other than the sale by a dealer in securities. a tax at the rate of six-tenths of one percent (6/10 of 1%) of the gross selling price or gloss value in money of the shares of stock sold, bartered, exchanged or otherwise disposed which shall be paid by the seller or transferor.
When must the taxpayer file and pay the percentage tax on the transfer of stocks which are listed and traded through the Local Stock Exchange?
The tax on sale of shares of stocks listed and traded through the Local Stock Exchange must be filed and paid by the taxpayer within five (5) banking days from the date of collection.
How does the taxpayer file and pay the percentage tax of stock transfer?
The Bureau of Internal Revenue (BIR) promulgated Revenue Regulations No. 9-2018, which provides the filing and payment procedures regarding percentage tax on stock transfers. The type of tax to be paid is the Share of Stocks (ST) Percentage Tax – Stocks.
For Electronic Filing and Payment System (eFPS) Filers, file and pay ½ of 1% online using existing BIR Form No. 2552 (Percentage Tax Return for Transactions Involving Shares of Stocks Listed and Traded Through the Local Stock Exchange or Through Initial and/or Secondary Public Offering).
For Electronic Bureau of Internal Revenue Forms (eBIRForms) Filers, file ½ of 1% online using existing BIR Form in the eBIRForms Package, and pay manually or through online payment:
Manual Payment may be done through:
- Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the stockbroker is registered; or
- In places where there are no AABs, the return shall be filed and the tax due shall be paid with the concerned Revenue Collection Officer (RCO), thru MRCOS facility, under the jurisdiction of the RDO.
For Manual Filers, fill-in applicable Form No. 2552 (pre-printed or downloaded from BIR website) using the new tax rate of 6/10 of 1%, and pay manually or thru online payment as stated above. Manual filers shall download the PDF version of the form, print the form and completely fill out the applicable fields.
Online Payment may be done through:
- Thru GCash Mobile Payment;
- Landbank of the Philippines (LBP) Linkbiz Portal – for taxpayers who have ATM account with LBP and/or for holders of Bancnet ATM/Debit Card
- Development Bank of the Philippines (DBP) Tax Online – for taxpayers-holders of Visa/Mastercard and/or Bancnet ATM/Debit Card
- Union Bank Online Web and Mobile Payment Facility – for taxpayers who have account with Union Bank.
About Nicolas and De Vega Law Offices
If you need assistance in Philippine tax law, or have any concerns in local or international taxation, including tax assessment or collection disputes, tax refunds, or tax cases involving Philippine taxes, we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at email@example.com. Visit our website www.ndvlaw.com.