REPUBLIC OF THE PHILIPPINES. DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City . AUG 03 mz REVENUE REGULATIONS No, 20° 2020 SUBJECT: Amending Certain Provisions of Revenue Regulations No. 06-2008 entitled Consolidated Regulations Prescribing the Rules on the Taxation of Sale, Barter, Exchange or Other Disposition of Shares of Stock held ax Capital Assets TO: All Revenue OMficiats. Employees, and Others Concerned. SECTION 1, Scope, ~ Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997 (Tax Code). as amended, in relation to Sections 24(C), 25(AM3), 28), 271012 28(AN7Ve). 28(BMSKe) of the Tax Code these Regulations are hereby promulgated to amend certain provisions of Revenue Regulations (RR) No. 6-201" in relation to RR No. 6-200R, relative to the imposition of tax for the sale. barter. exchange or other disposition of shares of stock not traded through the Local Stock Exchange. SECTION 2. Amendment, - Section 7 of RR No, 06-2008. as amended by RR No. 6-2013. is herehy imended to read as follows: “SHC 7. Sale, Barter or Exchange of Shates of Stock Not Traded Through a Local ‘Stock Evchange Pursuant 10 Sees, 24 (C) 28 (A M3), 28 (9), 27 (D912), 2REAN THC), SUR (5) (C) of The Tas Coste as Amended, (6.2) _ Definition of “fair market value” of the Shares of Stock. — For purposes of this Section, “fir market value” of the shares of stock sold shall he: teas (6.2.2) In the ease of shares of stack not listed and traded in the local sock ‘exchanges. the following rules shall apply’ 1) For common shares of stock. the book value based on the latest available financial ments duly certified by an independent public accountant prior to the date of sale, but not earlier than the immeffiately preceding wable year. shall he ‘considered asthe prima facie fair market value. 2) Hor preferred shares of stock. the liquidation value, which is equal to the redemption price of the preferred shares as of balance sheet date nearest 10 the transaction date, including any premium and cumulative preferred dis idlencs in arrears, shall be considered! as fair market value 1) In-ease there are both common and preferred shares, the hook value per common ‘hue is computed by deducting the liquidation value of the preferred shares from the total equity of the corporation and dividing the result hy the number of NE ym RECORDS MGT. aWvisiON‘outstanding common shares as of halance sheet uate nearest 10 the tamcactiosh ote Mlustration: Assume that Mr. A sold, 10,000 shares in X Corporation om fune 10 The corporation's accounting period is env a calendar yea basis. I this as, ‘the oak value as the fair market value oF the shares af tack in. C orpeeanicn shall he sictermined haved on its audited financial statements for year ering: December 11, 2019, since the mudited nancial statements fe tavahle sear S038 fs no yt existent as oF the cite a the sae Shares. Assume firther that hase on the audited financial statements as of Devsrnhe 2019, the votal aesets of X Corporation are Php St), 000,000 wile its liabilities a Phin20,000,000 resulting 40 an equity oF PhpYMLI.000. tts outstanding shares are NNLIN. For this purpose. the net book value as the fair market value of each ‘hare call he computed as follows 1,000,000 teats) 200,000 (outstanding shure) 180 (wet took vile pet shane) li this cave. the net hook value of the shares of stock in X Corporation hose ite tates! suited financial services shall be: Pup! SO per share. AS such. the fair market value of the shares of stosks in X Corporation shall be Phn! $# per share. 4), For this purpose. the hook value of the common shares af ste oF the liga value of the preferred shares af stock, ned not be adjssted 10 ingake an Appraisal surplus from any. prope! the comperation new reflected we enclenks! ‘in the Latest audited financial statements, in oner to determine the fair market uc of the shares of stock, ‘the latest mudited Financial stateymert= shall by ‘sTicient in determining the fait market valve of the shares of stock shyect of the salle, barter. evehange, or ather dispenition, a a we SECTION 3, Repealing Clause. — Ail revenue Hunnces or party thereof inconsistent Prowisions of these Regulations are herehy considered repealed. amended or modified avsial SECTION 4. Effectivity. ~ These regulations shall be effective after 1$ days fisllow ing its Purblivation in the Official Caretie or in a newspaper of general circulation CARLOS G. DOMINGUE Secretary of Finance AUS 07 2000 Recommending Appn (prrrekion, CAESAR R. DULAY. Commissioner of Ineral Revenue 036187 Bu AU OF INTERNAT REVENUE Ay j I SF EAT RECORDS MGT. DIVISION