Documentary Stamp Tax

 excise tax
 only paid on transactions or documents that are enumerated under the law
 General Rule: either party in the transaction is liable to pay the DST
o BIR can actually assess both parties for the payment of the DST
o if seller does not pay the DST, BIR can assess seller
 what if one party is exempt from tax, the other party who is not tax-exempt is going to pay DST
 although the general rule is either party, the rules and regulation in the BIR enumerates parties that are
constituted as collecting agents
o if di nakaenumerate na collection agent both parties, any party can pay the DST
o ex. lessor and lessee
 deadline of remittance: within 5 days following the close of the month

Who are constituted as collection agents?

 RR 9-2000
 Person liable to remit the DST. — In general, the full amount of the tax imposed under Title VII of the Code may
be remitted by any of the party or parties to the taxable transaction, except in the following cases:
1. Stamp tax on bonds, debentures, certificates of indebtedness, deposit substitute, or other similar instruments.
— The tax shall be remitted by the person who issued the instrument (e.g., "X" CORPORATION borrowed funds
from the public through the issuance and sale of its interest-bearing Bonds. In this case, the stamp tax due
thereon shall be remitted by "X" CORPORATION.)
2. Stamp tax on original issue of shares of stock in a corporation. — The corporation, which issued the share or
shares of stock, shall remit the tax due on the said issuance. The share of stock is considered issued upon
acceptance by the corporation of the subscriber's subscription for stock in the corporation, the actual delivery
by the corporation of the certificate evidencing the share of stock to the contrary notwithstanding.
3. Stamp tax on Jai-Alai, Horse Race, Lotto or other Authorized Numbers Games. — The proprietor or operator
shall remit the tax. If such proprietor or operator is exempt from the tax, he shall collect the tax from the other
party who is not exempt from the tax, and shall remit the same in the manner as prescribed in these
Regulations.

EXAMPLE:
a. The Philippine Charity Sweepstakes Office (PCSO), as a charitable institution under R.A. No. 1160, as
amended, is exempt from all taxes for which it may otherwise be directly liable pursuant to the provisions of
ART. VI, Sec. 28 (3) of the 1987 Constitution. The PCSO sells sweepstakes and Lotto tickets to the public who,
however, does not enjoy the same tax exemption privilege. Pursuant to Section 173 of the Code, which
provides that, whenever one of the parties to the taxable document or transaction is exempt from the
stamp tax, the other party who is not exempt shall be liable for the tax. Consequently, the PCSO shall collect
the tax from sweepstakes and Lotto tickets buyers, and shall remit the tax so collected in accordance with
the provisions of these Regulations.
b. The Philippine Amusement and Gaming Corporation (PAGCOR), either by itself or through its licensees or
grantees, undertake "Number Games" and sell "betting cards" to the betting public (e.g., "Bingo Cards"). In
this case, PAGCOR or its licensees/grantees shall remit the documentary stamp tax to the Bureau on their
respective sale of "betting cards" to the betting public.
4. When one of the parties to the taxable document or transaction is included in any of the entities enumerated
below, such entity shall be responsible for the remittance of the stamp tax prescribed under Title VII of the
Code: Provided, however, that if such entity is exempt from the tax herein imposed, it shall remit the tax as a
collecting agent, pursuant to the preceding paragraph 3(b)(2) hereof, any provision of these Regulations to the
contrary notwithstanding
a. A bank, a quasi-bank or non-bank financial intermediary, a finance company, or an insurance, a surety, a
fidelity, or annuity company;
 b. The proprietor or operator of Jai-alai, Horse-racing, Lotto and other Authorized Numbers Games, as
provided in these Regulations;
c. The Philippine Stock Exchange (PSE), in the case of shares of stock and other securities traded in the local
stock exchange;
d. A pre-need company on sale of pre-need plans as provided under Section 186 of the Code. For purposes of
these Regulations, the term "Pre-need" company shall include those providing pre-need health care
services, educational plan, memorial plan, pension plan, and other similar services.
e. An educational institution in respect of issuance of taxable certificates (e.g., Diploma, Transcript of Records,
and other documents taxable as certificates under Section 188 of the Code);
f. Warehouse operators in respect of warehouse receipts taxable under Section 189 of the Code;
g. The Corporation vis-a-vis the stamp tax on "Proxies" in the exercise of the stockholders' voting right, taxable
under Section 192 of the Code (e.g., appointment of a proxy in the election of the corporation's members of
the Board);
h. The transportation contractor vis-a-vis the Bills of Lading or Receipts taxable under Section 191 of the Code;
i. Franchise grantees and other taxpayers paying a fixed percentage of the prescribed taxable base in lieu of all
internal revenue taxes; and

Various Transactions subject to DST

 tax base depends on the transactions
 tax rate is given (TRAIN law)
 relatable to previous taxes discussed (Estate Tax, Donor’s Tax, Business Taxes) because they have implications to
DST

Original Issuance of Shares

 P2 for every P200 of the par value
 APIC does not form the tax base
 If you want to reduce DST, reduce the par
 If shares have no par, tax base is the issue price

Stock Dividend
 value represented by each share
 can also be original issuance of shares

Debt Instruments
 P1.50 per P200 of the face value of the debt instrument
 FV = principal whether discounted or not
 If maturity < 1yr: prorate the DST using 365 days
 If maturity ≥ 1yr: 1.5/200 of the FV
 Loan Transactions Exempt from DST (only applies to individuals)
1. Loan amount ≤ P250,000
2. Use: purchase or hire of house, lot, motor vehicle, appliance, furniture

 Problem 1
 Transaction A
 Old Law: 25% subscribe, 25% paid
 New Revised Corporation Law: No minimum capital
 the payment of the shares (40%) is not considered for DST purposes
o as long as subscribed (even if not yet fully paid), already 100% taxable
o even if there is no certificate of shares issued, subscription is already taxable
 based on par value
 Transaction B
 If there is an amendment or assignment of the agreement, doc stamps will not be triggered unless there is actual
change in term or amount.
 Section 198 of the Tax Code
 Section 199 (F): If there is no change in maturity date or remaining period of coverage from that of the original
instrument: EXEMPT.
 assignment: transferring the obligation to pay a debt
 for proration, determine the EXACT number of days
 Transaction C
 considered as loan/debts
 if company has a non-trade receivables, it is considered a debt instrument
 for DST, even if there is no evidence instrument, still taxable
o taxable even if no loan agreement or promissory notes
o you are essentially subjecting to tax the transaction, not the instrument
 do not prorate because there is no documentation that states that the due date is 6 months
o “expected”
o possible that it will not be paid within 6 months
o there is need for written agreement
 Transaction D
 for proration, determine the EXACT number of days
 Transaction E
 200,000 – exempt
 300,000 – taxable
 if it exceeds 250,000, the whole amount is taxable (not just the excess)

 Problem 2
 If domestic, and then sold, taxable
 If listed in PSE, and then sold from PSE, exempt
o But if disposed over the counter, taxable
 Domestic shares are subject to DST regardless of where sold, while foreign shares are only subject to DST if sold
within the PH.

Bank Deposits
 any deposit with a term or a maturity is subject to DST

Bills of Exchange
 subject to DST
 order for payment
 bank executes
 Does not matter if drawn in payable out (funds from inside, payable outside). or drawn out payable in, or drawn
in payable in
o same tax rates (P0.60 for every P200 of the value or the order for payment)

 Problem 3
 Transaction A
 there should be actual drawdown
 if there is no actual drawdown of the amount, not subject to DST
 Transaction B
 P3 per check
 bank should remit the DST to the BIR
 Transaction C
 only the time deposit is subject to DST because it has a maturity
 Section 179
 same rate as if loan
 Transaction D
 cross border transaction: there is bill of exchange and letter of credit
 impose DST once only (we look at the transaction)
 Transaction E
 export goods (drawn in the PH)
 bill of exchange will also be taxable at the same rate

 Problem 4
 Transaction A
 Life insurance policy
o DST is actually cheaper
o based on the FV of the policy (coverage) not the premiums
 coverage < 100,000 – exempt
 coverage > 100,000 but < 300,000 – P20
 coverage > 750,000 but < 1,000,000 – P50
 coverage > 1,000,000 – P100
 Transaction B
 Property Insurance
o FV is not important (based on premium)
 P0.50 on each P4 of the premium charges
 Transaction C
 Lease an Hiring Agreement
o lease of land or other tenements (buildings)
o subject to DST
o this provision does not cover lease of cars
 Notarized Lease Agreement
o certificate issued by a notary public and on each certificate of any description required by law or by rules or
regulations
o P30 per document
 Transaction D
 Lease of Land or Other Tenements
o P6 for first P2,000, additional P2 for every excess of P1,000 (or a portion of P1000)
o does not include lease of equipment or machinery
o compute total rentals, then apply the rate
600,000
 1,000
× 2 + 2 = 1,202
 Transaction E
480,000
 1,000
× 2 + 2 = 962
 Transaction F
 Section 196
 Conveyances of Real Property
o under new law, donations of real property are also taxable
 follows donor’s tax
 if exempt from donor’s tax, also exempt from DST
o P15 for every P1,000
 Are contracts to sell taxable? NO
o if contract to sell are executed, is there a conveyance of property? NO
o you are not transferring the title over the property
o not subject to DST
  What if notarized? Then there is a DST.
o P30 x 6 documents = P180
o DST could be a real stamp that you purchased, or an imagine stamp
 even if there is no actual affixture of a stamp, for as long as there is a tax return that the DST has been
paid
 Transaction G
 Conveyances of Real Property
o deed of sale evidences the conveyance of real property
o deed of sale is not subject to DST if for a personal property
o subject to DST
o tax base: Contract price or FMV, whichever is higher
 if donation: FMV
 Mortgages, Pledges and Deeds of Trust
o real or personal
o In-house Financing: there is a mortgage agreement
o implication: mortgage is subject to DST
o P40 for first P5,000, additional P20 for every P5,000 excess (or a portion of P5,000)
 if it is only one document, use the higher DST
 if 2 separate documents were executed, pay DST for each document

Documents and Papers Not Subject to Stamp Tax (Section 199)

The provisions of Section 173 to the contrary notwithstanding, the following instruments, documents and papers shall be
exempt from the documentary stamp tax:
(a) Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or
cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely
by the members thereof for the exclusive benefit of each member and not for profit.
(b) Certificates of oaths administered to any government official in his official capacity or of acknowledgment by any
government official in the performance of his official duties, written appearance in any court by any government
official, in his official capacity; certificates of the administration of oaths to any person as to the authenticity of any
paper required to be filed in court by any person or party thereto, whether the proceedings be civil or criminal;
papers and documents filed in courts by or for the national, provincial, city or municipal governments; affidavits of
poor persons for the purpose of proving poverty; statements and other compulsory information required of
persons or corporations by the rules and regulations of the national, provincial, city or municipal governments
exclusively for statistical purposes and which are wholly for the use of the bureau or office in which they are filed,
and not at the instance or for the use or benefit of the person filing them; certified copies and other certificates
placed upon documents, instruments and papers for the national, provincial, city, or municipal governments, made
at the instance and for the sole use of some other branch of the national, provincial, city or municipal governments;
and certificates of the assessed value of lands, not exceeding Two hundred pesos (P200) in value assessed,
furnished by the provincial, city or municipal Treasurer to applicants for registration of title to land.
(c) Borrowing and lending of securities executed under the Securities Borrowing and Lending Program of a registered
exchange, or in accordance with regulations prescribed by the appropriate regulatory authority: Provided,
however, That any borrowing or lending of securities agreement as contemplated hereof shall be duly covered by
a master securities borrowing and lending agreement acceptable to the appropriate regulatory authority and which
agreement is duly registered and approved by the Bureau of Internal Revenue. (BIR).
(d) Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos
( P250,000) or any such amount as may be determined by the Secretary of Finance, executed by an individual for
his purchase on installment for his personal use or that for his family and not for business or resale, barter or hire
of a house, lot, motor vehicle, appliance or furniture: Provided, however, That the amount to be set by the
Secretary of Finance shall be in accordance with a relevant price index but not to exceed ten percent (10%) of the
current amount and shall remain in force at least for three (3) years.
(e) Sale, barter or exchange of shares of stock listed and traded through the local stock exchange.
(f) Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any
agreement, contract, charter, or any evidence of obligation or indebtedness, if there is no change in the maturity
date or remaining period of coverage from that of the original instrument.
(g) Fixed income and other securities traded in the secondary market or through an exchange.
(h) Derivatives: Provided, That for purposes of this exemption, repurchase agreements and reverse repurchase
agreements shall be treated similarly as derivatives.
(i) Inter-branch or interdepartmental advances within the same legal entity.
(j) All forebearances arising from sales or service contracts including credit card and trade receivables: Provided, That
the exemption be limited to those executed by the seller or service provided.
(k) Bank deposit accounts without a fixed term or maturity.
(l) All contracts, deeds, documents, documents and transactions related to the conduct of business of the Bangko
Sentral ng Pilipinas.
(m) Transfer of property pursuant to Section 40 (C) (2) of the National Internal Revenue Code of 1997, as amended.
(n) Interbank call loans with maturity of not more than seven (7) days to cover deficiency in reverses against deposit
liabilities including those between or among banks and quasi-banks.
o interbank call loans: to meet the reserve requirements, banks borrow money from each other (overnight
loans)