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By Chino S. Leyco, Reporter
THE Bureau of Internal Revenue (BIR) has imposed
a new schedule of tax rates on the sale of shares through an initial
public offering (IPO).
According to the revenue regulation, every sale,
barter, exchange or other disposition of shares of stock through IPO
will be levied a transaction tax of 4 percent if the proportion of
disposed shares to outstanding shares is up to 25 percent, 2 percent
if over 25 percent but not over 33 and one third percent, and 1
percent if over 33 percent.
The issuing corporation will pay the said tax,
or the selling shareholder in the case of a secondary offering,
which involves the sale of existing shares.
Commissioner Lilian Hefti said the rule covers
individual and corporate taxpayers, as well as estate trust, trust
funds and pension funds, but excluding dealers in securities,
investors in shares of stock in a mutual fund company in connection
with the gains realized by said investor upon redemption of said
shares of stock in a mutual fund company, and all other persons
specifically exempt from internal revenue taxes under existing
investment incentives and other special laws.
The regulation also reiterates the tax rate of
one-half of 1 percent on every sale, barter, exchange or other
disposition of shares of stock listed and traded through the local
stock exchange other than the sale by a dealer of securities with
the gross selling price or gross value in money of the shares of
stock sold, bartered, exchanged or otherwise disposed of.
For sale, barter or exchange of shares of stock
not traded through a local stock exchange, the tax rate is 5 percent
if the amount of capital gain is not over P100,000, and 10 percent
on any amount in excess of P100,000. The tax base shall be upon the
net capital gains realized during the taxable year from the sale,
barter, exchange or disposition of shares of stock, except shares
sold or disposed of through the local bourse.
In determining the amount and recognition of
gain or loss, the selling price shall be the total consideration per
deed of sale.
If the total consideration of the sale or
disposition consists partly in money and partly in kind, the selling
price shall be the sum of money and the fair market value (FMV) of
the property received.
In case of exchange, the selling price shall be
the FMV of the property received and in case the FMV of the shares
of stock sold, bartered or exchanged is greater than the amount of
money or FMV of the property received, the excess of the FMV of the
shares of stock sold or bartered or exchanged over the amount of
money and the FMV of the property, if any, received as consideration
shall be deemed a gift subject to donor’s tax under the Tax Code.
The new regulation consolidates and updates
existing rules on stock transfer taxes.
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