Philippines: Tax treatment of sales of listed stocks
A report describing tax treatment of sales of stocks listed on the Philippine Stock Exchange
A report describing tax treatment of sales of stocks listed on Philippine Stock Exchange
The KPMG member firm in the Philippines prepared a report describing the tax treatment of sales of stocks listed on the Philippine Stock Exchange. The report is summarized below.
The short answer is that the tax code enforces a stock transaction tax on every sale, barter or exchange of shares in a listed company at a rate of 6/10 of 1% based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed.
The burden to pay the tax is imposed on the seller or transferor and remitted by the seller or transferor's broker. The stockbroker who effected the sale has the duty to collect the tax from the seller upon issuance of the confirmation of sale, issue the corresponding receipt thereof, and remit the same to the tax authorities.
The tax is not imposed on:
- Dealers in securities
- Investors in shares of stock in a mutual fund company
- All other natural or juridical persons who are specifically exempt from national internal revenue taxes under existing investment incentives and other special laws
KPMG observation
Whether non-resident foreign investors enjoying an income tax exemption under a law or treaty are exempt from the stock transaction tax has been subject to debate. Because the tax exemption under section 32(B)(7) of the tax code applies to net income, and the stock transaction tax is a percentage tax on gross income, non-resident foreign investors may not be able to claim an exemption from the stock transaction tax based on section 32(B)(7).
Read an July 2022 report prepared by the KPMG member firm in the Philippines
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