Question & AnswerQ&A (Republic Act No. 7660)
The primary purpose of Republic Act No. 7660 is to rationalize further the structure and administration of the documentary stamp tax, amend certain provisions of the National Internal Revenue Code related to documentary stamp taxes, allocate funds for specific programs, and other related purposes.
If one party to the taxable document is exempt from the tax, the other party who is not exempt shall be directly liable for the documentary stamp tax.
The documentary stamp tax is One peso and fifty centavos (P1.50) on each two hundred pesos, or fractional part thereof, of the face value of such documents.
Beginning 1996, the documentary stamp tax on sales or transfer of stock or securities is increased to One peso and fifty centavos (P1.50) on each two hundred pesos, or fractional part thereof, of the par value or as prescribed.
Loan agreements or promissory notes executed by an individual for his purchase on installment for personal use or that of his family and not for business, resale, barter, or hire, with an aggregate not exceeding Two hundred fifty thousand pesos (P250,000), are exempt from documentary stamp tax under Section 180.
Twenty-five percent (25%) of the incremental revenues shall accrue to a Special Education Fund administered by the Department of Education, Culture and Sports for school construction, teacher training, and procurement or production of instructional materials.
A documentary stamp tax of One peso and twenty-five centavos (P1.25) is imposed on each such instrument, increasing to One peso and fifty centavos (P1.50) beginning 1996.
The tax is Three pesos (P3.00) for the first Two thousand pesos (P2,000.00) or fractional part thereof, plus an additional One peso (P1.00) for every One thousand pesos (P1,000.00) or fractional part in excess of the first Two thousand pesos for each year of the term.
The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, has the authority to promulgate the necessary rules and regulations.