Law Summary

Overview

Republic Act No. 9243, enacted on February 17, 2004, revises the provisions regarding the documentary stamp tax as outlined in the National Internal Revenue Code of 1997, as amended.

SEC. 1 - Deletion of Section 174

• Legal Principle: Section 174 of the National Internal Revenue Code is deleted.
• Key Definition: N/A
• Important Requirements: N/A
• Timeframes: N/A
• Consequences: N/A

SEC. 2 - Amendment of Stamp Tax on Original Issue of Shares

• Legal Principle: The documentary stamp tax on original issues of shares of stock is specified.
• Key Definitions:
  • Shares of Stock: Includes original issues for organization, reorganization, or lawful purposes.
• Requirements:
  • Tax of ₱1.00 for every ₱200 of par value.
  • For shares without par value, tax based on actual consideration.
  • In case of stock dividends, tax based on actual value per share.
• Consequences: Failure to comply with tax provisions may lead to penalties as per tax law.

SEC. 3 - Amendment of Stamp Tax on Sales and Transfers of Shares

• Legal Principle: Sets the tax rate for sales or transfers of shares or certificates of stock.
• Key Definitions:
  • Stock Transfer: Includes all forms of transferring stock ownership.
• Requirements:
  • Tax of ₱0.75 for every ₱200 of par value.
  • Only one tax collected per transfer.
  • For shares without par value, tax equals 25% of the original issue's tax.
• Consequences: Non-payment may lead to legal repercussions.

SEC. 4 - Renumbering of Sections

• Legal Principle: Sections 177 to 179 are renumbered as Sections 176 to 178.
• Key Definitions: N/A
• Requirements: N/A
• Timeframes: N/A
• Consequences: N/A

SEC. 5 - Amendment of Stamp Tax on Debt Instruments

• Legal Principle: Establishes tax on the original issue of debt instruments.
• Key Definitions:
  • Debt Instrument: Includes debentures, bonds, and other borrowing documents.
• Requirements:
  • Tax of ₱1.00 for every ₱200 of issue price.
  • Proportional tax for instruments with terms less than one year.
• Consequences: Non-compliance may incur penalties.

SEC. 6 - New Provision on Bills of Exchange or Drafts

• Legal Principle: Imposes a tax on bills of exchange or drafts.
• Key Definitions:
  • Bills of Exchange/Drafts: Instruments for payment within Philippine territory.
• Requirements:
  • Tax of ₱0.30 for every ₱200 of face value.
• Consequences: Failure to pay tax as prescribed may lead to penalties.

SEC. 7 - Amendment of Stamp Tax on Life Insurance Policies

• Legal Principle: Tax on insurance policies and renewals is established.
• Key Definitions:
  • Life Insurance Policies: Any agreement for life insurance coverage.
• Requirements:
  • Tax of ₱0.50 for every ₱200 of premium.
• Consequences: Non-compliance may lead to penalties.

SEC. 8 - Amendment of Stamp Tax on Annuities and Pre-Need Plans

• Legal Principle: Tax structure for annuities and pre-need plans is outlined.
• Key Definitions:
  • Annuities: Financial products providing periodic payments.
• Requirements:
  • Tax of ₱0.50 for every ₱200 for annuities and ₱0.20 for pre-need plans.
• Consequences: Non-payment may result in legal repercussions.

SEC. 9 - Exemptions from Documentary Stamp Tax

• Legal Principle: Lists documents and transactions that are exempt from tax.
• Key Definitions:
  • Exempt Instruments: Includes various government documents, insurance policies by fraternal societies, and loans below ₱250,000.
• Requirements:
  • Specific instruments are exempted from the tax.
• Consequences: Transactions not covered by exemptions may be subject to tax.

SEC. 10 - Implementing Rules and Regulations

• Legal Principle: Establishes authority for the issuance of implementing rules.
• Key Definitions: N/A
• Requirements: The Secretary of Finance and other authorities must create necessary rules.
• Timeframes: N/A
• Consequences: Non-compliance with the rules may lead to penalties.

SEC. 11 - Separability Clause

• Legal Principle: Ensures that if any provision is invalid, the rest remain in effect.
• Key Definitions: N/A
• Requirements: N/A
• Consequences: Invalid provisions do not affect the validity of the remaining law.

SEC. 12 - Repealing Clause

• Legal Principle: Repeals all inconsistent laws and provisions.
• Key Definitions: N/A
• Requirements: N/A
• Consequences: Prior laws inconsistent with this Act are void.

SEC. 13 - Effectivity

• Legal Principle: Specifies when the Act takes effect.
• Key Definitions: N/A
• Requirements: Act is effective 15 days after publication.
• Consequences: Non-compliance before the effectivity date may lead to penalties.

Key Takeaways

• Republic Act No. 9243 revises documentary stamp tax provisions, clarifying rates and exemptions.
• Key tax rates established for shares, debt instruments, insurance policies, and annuities.
• Specific exemptions outlined for certain documents and transactions.
• The Act emphasizes compliance and the need for implementing rules by designated authorities.
• Provisions for separability ensure stability of the remaining law if parts are invalidated.