Law Summary
Renumbering and Amendment of Sections under Title VII (Documentary Stamp Tax)
- Sections under Title VII have been retitled, renumbered, and amended to align with R.A. 9243.
- Key sections include those imposing DST on original issue of shares, transfers, bonds, insurance policies, leases, mortgages, and other documents.
DST on Original Issue of Shares of Stock (Section 174)
- New DST rate: P1.00 per P200 or fractional part of par value.
- Applies to original shares issued on organization, reorganization, or other lawful purposes.
- For shares without par value, tax basis is actual consideration.
- Stock dividends taxed on actual value per share.
- DST imposed on acquisition of ownership attributes, regardless of certificate delivery or full payment.
DST on Sales, Agreements to Sell, and Transfers of Shares (Section 175)
- DST rate revised to P0.75 per P200 or fraction of par value.
- Tax applied on all sales, agreements to sell, memoranda, or transfers of shares/certificates.
- Only one tax per sale/transfer regardless of certificate issuance or delivery.
- For shares without par value, tax is 25% of DST paid on original issue.
- Transfers done to "nominees" may be exempted upon proof of nominee agreement.
- Executory contracts (agreements to sell) also subject to DST; subsequent actual transfer not taxed if DST paid on agreement.
DST on Debt Instruments (Section 179)
- Unitary rate of P1.00 per P200 or fractional part of issue price.
- Covers all borrowing/lending instruments: bonds, debentures, loan agreements (including those signed abroad for assets in Philippines), promissory notes, certificates of indebtedness, deposit substitute debt instruments, and specified deposit certificates.
- Proportional tax applied for debt instruments with terms less than one year.
- Only one DST imposed on either loan agreement or promissory note securing that loan.
- Secondary market sales of debt instruments not subject to DST.
- Higher interest-bearing bank deposits with maturity dates included.
- Ordinary demand and savings deposits without fixed terms remain exempt.
DST on Domestic Bills of Exchange or Drafts (Section 180)
- DST rate of P0.30 per P200 or fractional part of face value for bills of exchange or drafts drawn within Philippines.
- Complements DST on foreign bills of exchange under Section 182.
DST on Life Insurance Policies (Section 183)
- DST remains at P0.50 per P200 or fractional part based on premium collected, not amount insured.
- Applies only to policies issued or renewed on or after March 20, 2004.
- Premium collection includes direct payments and payments made via cash surrender values or dividends.
- Policies existing before March 20, 2004, are subject to old DST rules if previously fully paid.
- Additional coverage or riders considered new issues and subject to DST.
- Insurance companies required to submit inventory of outstanding valid policies as of March 19, 2004.
DST on Policies of Annuities and Pre-Need Plans (Section 186)
- Annuities: DST of P0.50 per P200 on premiums, installments, or contract price collected.
- Pre-need plans: DST of P0.20 per P200 on premiums or contributions collected.
- Applies to policies issued on or after March 20, 2004.
- Older policies listed in inventory follow old DST provisions.
- Annual submission of inventory of outstanding policies mandated.
Exemptions from Documentary Stamp Tax (Section 199)
- Exempt documents include:
- Policies by fraternal societies, certificates of government oaths, government-filed papers, affidavits for poor persons.
- Borrowing and lending securities under registered programs.
- Loan agreements/promissory notes below P250,000 for personal use.
- Sale or trade of stock through local stock exchange (5-year exemption).
- Assignments or renewals without changes in maturity or coverage.
- Fixed income and other securities traded in secondary market.
- Derivatives issued and authorized by Bangko Sentral ng Pilipinas (BSP).
- Interbranch loans within same legal entity.
- Forebearances by sellers on sales or service contracts.
- Bank deposit accounts without fixed term or maturity.
- Business transactions of BSP.
- Transfers pursuant to Section 40(C)(2) of the NIRC.
- Interbank call loans with maturity not exceeding 7 days to cover reserve deficiencies.
Applicability to Electronic Documents
- DST applied to documents in electronic form unless expressly exempted.
- Electronic documents legally equivalent to written documents under the Electronic Commerce Act.
Repealing Clause
- Inconsistent existing rules and regulations are repealed, amended, or modified accordingly.
Effectivity
- Regulations apply to transactions and documents executed from March 20, 2004 onward, the effectivity date of R.A. No. 9243.