Clarification on DST Payment Timing on Deeds

The circular clarifies documentary stamp tax timing under Section 173 in relation to Section 196 of the Tax Code as amended.
The circular links the consequences of delayed documentary stamp payment to Sections 248 and 249 of the Tax Code as amended.
The circular recognizes the abatement of penalty through Section 204 of the Tax Code as amended.
The circular treats documentary stamp payment as governed by the statutory rules on documentary stamps purchased, affixed, and cancelled or by notation of payment with a specified denomination.

Documentary stamp tax on deeds of sale is effected by the purchase, affixture, and subsequent cancellation of documentary stamps (or by notation of payment of documentary stamp tax with denomination of P10.00 or more).
Payment is effected at the time such act is done or transaction had.
For deeds of sale, “time such act is done or transaction had” is tied to the date of execution or signing of the document by the parties.
Documentary stamp payment is not measured by the date of notarization.
The time of purchase and affixture (or notation of DST payment) on the deed controls the compliance assessment.

Any delay in the purchase and affixture (or notation) of documentary stamps on deeds of sale subjects the deed to statutory penalties.
The penalty includes 25% surcharge under Sections 248 and 249 of the Tax Code as amended.
The penalty also includes 20% interest per annum under Sections 248 and 249 of the Tax Code as amended.
The circular applies these penalties when documentary stamp payment is delayed beyond the timing required by the execution/signing date rule.

The surcharge and interest apply except when the taxpayer proves by clear and convincing evidence a reasonable and justifiable cause for the delay.
A justifiable cause includes circumstances such as a non-working holiday or a strong typhoon and flooded streets.
The circular recognizes that during such emergencies, BIR offices are closed and it becomes impossible to purchase the required documentary stamps.
When the taxpayer meets the evidentiary requirement, the Commissioner of Internal Revenue may exercise the power to abate an imposition or assessment of penalty under Section 204 of the Tax Code as amended.

Internal revenue officers are enjoined to be guided accordingly in enforcing the clarified timing rule.
The circular is issued to resolve continuing confusion among Revenue Regional and District Offices on the correct time of documentary stamp payment for deeds of sale.
The circular identifies Revenue Memorandum Circular No. 45-88 dated 07 September 1988 as the initial BIR response to the implementation problem.
Further clarifications are issued to address implementation problems and to ensure fairness to taxpayers in applying documentary stamp timing rules.