Documentary Stamp Taxes.docx

DOCUMENTARY STAMP TAXES 1. Documentary stamp tax is a tax on documents, instruments and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property thereto. 2. Nature a. Privilege tax/Excise tax. The law taxes the document because of the privilege to enter into a transaction. b. It is also applicable to transactions effected and consummated outside the Philippines where the obligation or right arises from Philippine sources or the property is located within the Philippines. 3. Time of payment and filing a. DST shall be paid at the time the act is done or transaction had. b. Filing of the tax return and payment of the tax shall be within 5 days after the close of the month when the taxable document was made. 4. Whenever one party enjoys exemption from the tax imposed, the other party thereto who is not exempt shall be the one directly liable for the tax. 5. Original issue of shares of stock a. New: P2.00 on each 200 (Old: P1.00 on each 200) of the par value or the actual consideration, in case of no par shares b. On stock dividends, the amount of the tax is based on the actual value (or book value) represented by each share 6. Sales, agreements to sell shares a. New: P1.50 on each 200 (Old: P0.75 on each 200) of the par value; or in case of no par shares, New: 50% of the DST (Old: 25% of the DST) paid upon original issuance. b. If there are stock dividends received, upon sale of shares, the total par value of original acquisition shall be divided among the total number of shares (including the stock dividends) in order to determine the DST payable upon the sale of shares. 7. Debt instruments a. If the debt instrument has a term of less than one (1) year, the DST shall be computed taking into consideration the number of days that the instrument is outstanding as a fraction of 365 days. b. If the debt instrument has a term one year or longer, the DST shall be computed based on the issue price. In other words, there’s no need to apportion the DST. 8. Leases and other hiring agreements a. New: 6.00 for the first 2,000 + 2.00 for every 1,000 thereafter (Old: 3.00 for the first 2,000 +1.00 for every 1,000 thereafter b. Tax base is the total rent payments in the lease agreement c. Lease of personal property is not subject to DST 9. Conveyance of real properties a. There is no DST on contracts to sell since there is no conveyance of property. But the execution of document or contract has a DST of New: P30.00 (Old: P15.00) 10. [TRAIN] Transfers without consideration (donation) of real property is now subject to DST. Transfers exempt from donor’s tax are exempted from DST. 11. Loans and mortgages a. Loan by an individual whose principal is P250,000 or less, and is to be used for acquiring personal properties are exempt from DST b. If the mortgage and the loan are executed on separate documents, the DST is paid on both the mortgage and the loan. But if the mortgage and the loan are executed in only one document, the DST that is paid is the higher between the DST from mortgage and DST from the loan.

Income tax Donor’s tax VAT EWT DST LTT

Sale of real property Ordinary Gain = CP-cost FMV or CP, higher GSP = CP or FMV CP or FMV CP or FMV CP or FMV

Capital CP or FMV Exempt Exempt NA CP or FMV CP or FMV