Tax Alert No. 4 [Revenue Memorandum Circular (RMC) No. 6-2022 dated 18 January 2022]

Clarification on the Documentary stamp Tax lmposed under Section 175 of the 1997 Tax Code, as Amended, on Transfer of Shares of Stocks 

The Commissioner of Internal Revenue has issued Revenue Memorandum Circular (RMC) No. 6-2022 to clarify the Documentary Stamp Tax (DST) imposed pursuant to Section 175 of the 1997 Tax Code, as amended, on the transfer of shares of stock. Generally, Section 175 imposes DST on secondary transfers of shares of stock at the rate of one peso and fifty centavos (PHP1.50) on each PHP200, or fractional part thereof, of the par value of stock transferred.

As such, the RMC has clarified that the following transfers of shares of stock shall also be subject to DST under Section 175:

1. Transfer pursuant to a Deed of Donation;
2. Transfer pursuant to a Will of the Decedent as approved by the probate court in a Judicial Settlement of Estate; and,
3. In the absence of a Will, Judicial Settlement of Estate as approved by the probate court or Extra-Judicial Settlement of Estate, where an heir specifically waives or renounces his or her share over the inheritance, and the waived or renounced shares are transferred to another heir.

You may access the full version of the Circular through the BIR website.