Shall include

shares of
stock of a
corporation Held as
Section 127(A) NIRC capital assets
Tax on sale, barter or exchange of shares of stock listed and traded through the local
stock Refers to any domestic corporation
- Based on 6/10 of 1% of Gross Selling Price (1/2 of 1% previous)

Stock
Transaction Tax
The following sellers or transferors of stock are liable to this tax

1) Individual taxpayer, whether citizen or alien;

2) Corporate taxpayer, whether domestic or foreign; and
3) Other taxpayers not falling under (a) and (b) above, such as estate, trust, trust
funds and pension funds, among others.

Paid to whom? Bureau of Internal Revenue (BIR)

Paid when? Within five (5) banking days from the date of collection thereof

The taxes imposed under this section (sec 127A) shall not apply to the following:

1) Dealers in securities
2) Investor in shares of stock in a mutual fund company, as defined in Section 22
(BB) of the Tax Code, as amended, in connection with the gains realized by said
investor upon redemption of said shares of stock in a mutual fund company;
and
3) All other persons, whether natural or juridical, who are specifically exempt from
national internal revenue taxes under existing investment incentives and other
special laws.

Note: The VAT rate in case of a dealer in securities is based on gross income, not on
gross sales or receipts.

Definition of terms

Shares of stock – shall include shares of stock of a corporation

Local Stock Exchange – refers to any domestic organization

Shares listed and traded through the local stock exchange – refers to all sales

Stockbroker – includes all persons whose business is, for other brokers

Dealers in securities – means merchant

 Closely held
Section 127(B) NIRC corporations
Tax on shares of stock sold or exchanged through the Initial Public Offering

- Based on Gross Selling Price; or

- Based on Gross value in money of the shares of stock sold, etc., in accordance
with the shares of stock sold, etc., to the total outstanding shares of stock after
listing in the local stock exchange.

Ratio/Proportion Percentage tax

Up to 25% 4%
Over 25% but not over 33
2%
1/3%
Over 33 1/3% 1%

Persons liable to tax on IPO

1) Issuing corporation – “Primary offering” - issuer

2) Shareholders – “Secondary offering” – selling shareholder

The taxes imposed under this section (sec 127A) shall not apply to the following:

1) Dealers in securities
2) Investor in shares of stock in a mutual fund company, as defined in Section 22
(BB) of the Tax Code, as amended, in connection with the gains realized by said
investor upon redemption of said shares of stock in a mutual fund company;
and
3) All other persons, whether natural or juridical, who are specifically exempt from
national internal revenue taxes under existing investment incentives and other
special laws.

Definition of terms

Gross selling price refers to the total amount of money or its equivalent which the
purchaser pays the seller as consideration for the shares of stock

Gross value in money means the “fair value”

Initial Public Offering (IPO) refers to public offering of shares of stock made for the
first time in the Local Stock Exchange

Closely Held Corporation means any corporation at least fifty percent (50%) in value
of outstanding capital stock of at least fifty percent (50%) of the total combined voting
power of all classes of stock entitled to vote is owned directly or indirectly by or for not
more than twenty (20) individuals