Legal Heads Up
Basic Tax Consequences of Transfers of Shares Not Traded in the Stock Exchange under the Tax Code, as amended by TRAIN 1
In general, the sale, barter, exchange or other disposition of shares of stock in a Philippine corporation not traded in the stock exchange is subject to the following:
- Capital Gains Tax (CGT) is imposed on the net capital gains realized during the taxable year from the sale, exchange or other disposition of shares of stock in a domestic corporation.
- Documentary Stamp Tax (DST) is imposed on all sales, or agreements to sell, or memoranda of sales, or deliveries, or transfer of shares or certificates of stock in any association, company, or corporation.
- If the fair market value (FMV) of the shares of stock exceeds the selling price, the difference may be subject to donor’s tax
CGT | DST | Donor’s Tax | |
Rate | The CGT rate for non-resident foreign corporations remains unchanged at 5% for the first Php100,000 of net gain and 10% on amounts in excess of Php100,000. The CGT rate for resident individuals and domestic corporations increased from 5%/10% to 15% of net gain. | Php1.50 on each Php200 of the par value of the shares of stock sold. | 6% of net donations for gifts above P250,000 yearly regardless of relationship to the donor. |
Due Date for Filing of Returns and Payment of Taxes | Within thirty (30) days from date a share purchase agreement is notarized/consularized, and the tax thereon shall be paid at the same time the return is filed. | Within the first five (5) days of the month succeeding the date of notarization/consularization, and the tax thereon shall be paid at the same time the return is filed. | Within thirty (30) days after the date the gift is made or completed, and the tax thereon shall be paid at the same time the return is filed. |
Failure to timely file the returns and pay the taxes due shall subject the basic tax to a 25% surcharge, 12% interest per annum, plus graduated compromise penalties of up to Php50,000.
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