Tax Alert No. 24 Revenue Regulations (RR) No. 20-2025

Implementing the Rate Adjustment of Stock Transaction Tax (“STT”) and the Imposition of the STT on the Sale or Exchange of Domestic Shares of Stocks and Other Securities Listed and Traded Through a Foreign Stock Exchange Under Section 17 of Republic Act No. 12214, Otherwise Known as the “Capital Markets Efficiency Promotions Act”, Further Amending Section 127 of the National Internal Revenue Code of 1997, As Amended.

Please be informed that Revenue Regulations (“RR”) No. 20-2025 has been issued to implement the rate adjustment of STT and the imposition of the STT on the sale or exchange of domestic shares of stocks and other securities listed and traded through a foreign stock exchange other than sale by a dealer in securities, in lieu of capital gains tax, under Section 127 of the Tax Code. Effective 01 July 2025, STT of 1/10 of 1% (0.1%) will be imposed on the gross selling price or gross value in money of the shares of stock/other securities sold, exchanged or disposed. Previously, the STT rate was 0.6%.

Other salient provisions of this RR are as follows:

• Gains from the sale, exchange, or disposition of listed shares by licensed securities dealers—acting for the individual’s own account in the ordinary course of business—are treated as ordinary income and subject to regular income tax rates for individuals and corporations
• Broker must collect the tax and remit it to the Bureau of Internal Revenue (“BIR”) within five (5) banking days from the date of collection. It shall also submit every Monday to the secretary of the stock exchange a true and complete return which shall contain a declaration of all the transactions effected through the broker during the preceding week and of taxes collected by the broker and turned over to the BIR.
• For shares of domestic corporations listed and traded on foreign exchanges, the selling shareholder—either directly or through a broker or authorized representative—is responsible for tax collection and remittance. The STT must be remitted within ten (10) banking days from collection
• No transfer of ownership or registration of shares shall be recorded unless proof of STT payment is submitted to the corporation’s stock transfer agent or secretary. Non-compliance may result in penalties under Title X of the Tax Code

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

For any inquiry or request for assistance, please feel free to contact anyone from our Tax Services group. You may also reach us through this link