Revenue Memorandum Circular No. 46-2014 dated 25 April 2014

5 June 2014

The Commissioner of Internal Revenue (“CIR”) has issued Revenue Memorandum Circular No. 46-2014 dated 25 April 2014 (the “Circular”) to clarify that the documentary stamp tax (DST) on original issuance of debt instruments applies to financial leases.

The Circular provided that a “financial lease” as defined in Revenue Regulations No. 9-2004 is akin to a debt rather than a lease contract. Thus, even if a finance lease is not one of those enumerated as debt instruments under Section 179 of the Tax Code, it shall be subject to DST at the rate of one peso (PHP1.00) for each two hundred pesos (PHP200.00) or a fractional part thereof, of the issue price of the debt instrument.

The Circular states that it is effective immediately.