Transaction tax on traded shares

THE National Internal Revenue Code, as amended (Tax Code), imposes a transaction tax on the sale, barter, exchange or other disposition of shares listed and traded through the local stock exchange (other than the sale by a dealer in securities) at the rate of 0.6 percent of the gross selling price, to be paid by the seller or transferor. Before the enactment of the "Tax Reform for Acceleration and Inclusion" (Train) law (Republic Act 10963), the rate was 0.5 percent.

The duty to collect and remit the tax to the Bureau of Internal Revenue (BIR) is placed on the stockbroker who effected the sale. The stockbroker must remit the tax within five banking days from the date of collection. For primary offerings, it is the issuing corporation that is duty-bound to file the return and pay the tax within 30 days from the date of listing of the shares.