Stock transactions now subject to higher tax

by Doris Dumlao-Abadilla, Inquirer, Jan 1, 2017

A 20-percent increase in stock transaction tax (STT) takes effect at the Philippine Stock Exchange today in line with the recently-enacted Tax Reform for Acceleration and Inclusion law.

Philippine Stock Exchange president Ramon Monzon issued on Friday a reminder on the change in the taxation of stock transactions.

With the New Year turnover break, however, trading at the stock market will resume on Wednesday (Jan. 3).

Under the recently-enacted tax law, the STT was increased from one-half of one percent (0.5 percent) to six-tenths of 1 percent (0.6 percent) of the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed.

“The STT applies to every sale, barter, exchange or other disposition of shares of stock listed and traded through a local stock exchange, other than sale by a dealer in securities, and shall be paid by the seller or transferor,” Monzon said.

The increase in the STT is seen to yield P1.7 billion in additional revenue yearly but the PSE earlier raised concern that this would make local equities less competitive versus regional peers.

Even at the old rate of 0.5 percent, the STT in the Philippines was already the highest in the region.

In Malaysia, stock transactions at the Bursa Malaysia are charged with only 30 basis points of the transaction value in the form of stamp duty while in Hong Kong Exchanges, such transactions are charged with only 10 basis points of the transaction value in the form of stamp duty. In Vietnam, a capital gains tax equivalent to 10 basis points of gross sale proceeds is levied on transactions through the Ho Chi Minh Exchange.

Indonesia also imposes a stock transaction tax equivalent to only 10 basis points of the transaction amount. There is an additional 50 basis points charged for founder shares of companies doing an initial public offering.