Title
Rationalizing Documentary Stamp Tax Act
Law
Bir Revenue Regulation No. 9-94
Decision Date
Mar 8, 1994
Republic Act No. 7660 rationalizes the structure and administration of the documentary stamp tax, imposing specific tax rates on various financial instruments, loan agreements, and securities, while detailing the responsibilities of parties involved in taxable transactions.
documentary stamp
national internal
revenue code
A

Persons Liable for Documentary Stamp Tax

  • Tax payable by the person making, signing, issuing, accepting, or transferring documents related to transactions.
  • Applies if obligation or property arises from Philippine sources or is located in the Philippines.
  • When one party is exempt, the other non-exempt party is liable.

Definitions

  • "Act": Republic Act No. 7660.
  • "Loan Agreement": Written contract delivering money or consumable things under condition of equal return; includes credit facilities.
  • "Securities": Bonds, notes, shares, certificates, or instruments evidencing indebtedness or investment, including membership certificates and various contracts without tangible returns.
  • Juridical obligations or rights must arise from Philippine sources for DST applicability.
  • "Promissory Note": Instrument promising payment at a definite time.
  • "Lotto": Authorized numbers game including various lottery forms.
  • "Government Instruments": Bonds or securities issued by the government or subdivisions.

Time and Manner of Paying DST

  • Payment via purchase and affixture of stamps unless tax due is P10 or more.
  • If tax due is P10 or more, payment at the time of transaction with evidence of payment noted on document instead of affixing stamps.
  • Cancellation of stamps by writing, stamping, or perforation to mark payment.

Stamp Tax on Stock Certificates

  • DST imposed on fully paid shares: P2 for each P200 or fraction of par value.
  • For stock without par value, tax based on actual consideration received.
  • Tax accrues upon issuance of shares, delivery of certificates not required.

Stamp Tax on Loan Agreements

  • DST of 30 centavos per P200 or fraction on face value of loan agreements.
  • Applies to loans made in the Philippines or abroad with Philippine source obligation or property.
  • Includes credit facilities evidenced by memos or withdrawal slips.

Loans Secured by Promissory Notes

  • Only one DST imposed on either loan agreement or promissory note, whichever yields higher tax.

Loans Secured by Pledge or Mortgage

  • Single instrument covering loan and security taxed under Section 195.
  • Tax computed on full loan or credit amount.

Exemptions on Purchase on Installment Basis

  • Loans/promissory notes not exceeding P250,000 for personal purchase of house, vehicle, appliances, or furniture are exempt.
  • Aggregate of multiple related promissory notes considered for exemption.
  • If purchase exceeds P250,000, entire amount subject to DST.

DST on Government Securities

  • Tax of 30 centavos per P200 or fraction on face value of government-issued instruments.

Rates of Documentary Stamp Taxes

  • Bonds, debentures: P1.50 per P200.
  • Original certificates of stock: P2 per P200 or based on actual consideration if no par value.
  • Sales or transfers of stocks/securities: P1 per P200, increased to P1.50 from 1996.
  • Certificates showing interest: 50 centavos per P200.
  • Bank checks, drafts, non-interest bearing certificates of deposit: P1.25, increasing to P1.50 from 1996.
  • Loan agreements, promissory notes, government securities: 30 centavos per P200.
  • Insurance policies on property: 50 centavos per P4 premium.
  • Fidelity bonds and other insurance: 50 centavos per P4 premium.
  • Annuities and pre-need plans: P1.50 per P200 or 50 centavos per P500 respectively.
  • Indemnity bonds: 10 centavos per P4 premium, increased to 30 centavos from 1996.
  • Certificates issued by officers or notaries: P10, increasing to P15 from 1996.
  • Warehouse receipts: P10, increasing to P15 from 1996; exemption below P200 monthly value.
  • Lottery and number games: 10 centavos per ticket plus additional if above P1 cost.
  • Bills of lading or receipts: P1 if value between P100-P1,000, P10 if above P1,000; exemption for accompanied baggage on passenger carriers.
  • Proxies: P10, increasing to P15 from 1996, except for religious, charitable, literary associations.
  • Powers of attorney: P5.
  • Leases and hiring agreements: P3 for first P2,000 plus P1 per additional P1,000 per year.
  • Mortgages, pledges, deeds of trust: P20 if secured amount ≤ P5,000; additional P10 per P5,000 or fraction above P5,000.
  • Sale or conveyance of real property: P15 if value ≤ P1,000; additional P15 per each additional P1,000.
  • Charter parties for ships: rates vary based on tonnage and duration (e.g. P500 for ≤1,000 tons up to 6 months).

Penalties for Late or Nonpayment

  • 25% surcharge on basic tax for late payment.
  • Additional 20% per annum interest if tax and surcharge remain unpaid.
  • Other violations subject to penalties under Title X, Chapter II of the Tax Code.

Repealing Clause

  • Existing inconsistent rules or regulations are revoked or modified.

Effectivity

  • Regulations effective for transactions and documents issued as of January 14, 1994, the date Republic Act No. 7660 took effect.

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