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DST & OPT

Atty. Kim M. Aranas, CPA, CAT


USC-SLG
Cebu City
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Coverage
• Purpose and Nature
• Tax Rate and Tax Base
• Exemptions
• Return and Payment of DST
• Effects of Failure to Affix Documentary Stamp
• Jurisprudence

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DOCUMENTARY STAMP TAX
Purpose:
• The untaxed document will not be recorded,
nor will it or any copy thereof or any record of
transfer of the same be admitted or used in
evidence in court until the requisite stamp or
stamps have been affixed thereto and cancelled
• No notary public or other officer authorized to
administer oaths will add his jurat or
acknowledgment to any document subject to
Documentary Stamp Tax unless the proper
documentary stamps are affixed thereto and
cancelled.
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DOCUMENTARY STAMP TAX
Nature:
In general, documentary stamp taxes are levied on the exercise by
persons of certain privileges conferred by law for the creation,
revision, or termination of specific legal relationships through the
execution of specific instruments. Examples of such privileges, the
exercise of which, as effected through the issuance of particular
documents, are subject to the payment of documentary stamp taxes
are leases of lands, mortgages, pledges and trusts, and conveyances
of real property. (Philippine Home Assurance Corporation v. Court of Appeals)
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Who are required to file Documentary Stamp
Tax Declaration Return?
a) In case of constructive affixture of documentary stamps, by the persons making,
signing, issuing, accepting or transferring documents, instruments, loan agreements
and papers, acceptances, assignments, sales and conveyances of the obligation, right or
property incident thereto wherever the document is made, signed, issued, accepted or
transferred when the obligation or right arises from Philippine sources or the property is
situated in the Philippines at the same time such act is done or transaction had;
b) By using the web-based Electronic Documentary Stamp Tax (eDST) System in the
payment/remittance of its/his/her DST liabilities and the affixture of the prescribed
documentary stamp on taxable documents; and
c) By Revenue Collection Agent, for remittance of sold loose documentary stamps.
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Philacor Credit Corporation vs. Commissioner of Internal Revenue,
G.R. No. 169899. February 6, 2013
Under Section 173 of the National Internal Revenue Code, the persons primarily liable for the payment of
DST are the persons (1) making; (2) signing; (3) issuing; (4) accepting; or (5) transferring the taxable
documents, instruments or papers. Should these parties be exempted from paying tax, the other party
who is not exempt would then be liable. In this case, petitioner Philacor is engaged in the business of retail
financing. Through retail financing, a prospective buyer of home appliance may purchase an appliance on
installment by executing a unilateral promissory note in favor of the appliance dealer, and the same
promissory note is assigned by the appliance dealer to Philacor. Thus, under this arrangement, Philacor did
not make, sign, issue, accept or transfer the promissory notes. It is the buyer of the appliances who made,
signed and issued the documents subject to tax while it is the appliance dealer who transferred these
documents to Philacor which likewise indisputably received or “accepted” them. Acceptance, however, is
an act that is not even applicable to promissory notes, but only to bills of exchange. Under the
Negotiable Instruments Law, the act of acceptance refers solely to bills of exchange. In a ruling adopted by
the Bureau of Internal Revenue as early as 1995, “acceptance” has been defined as having reference to
incoming foreign bills of exchange which are accepted in the Philippines by the drawees thereof, and not
as referring to the common usage of the word as in receiving. Thus, a party to a taxable transaction who
“accepts” any documents or instruments in the plain and ordinary meaning does not become primarily
liable for the tax.
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Where DST Return is filed?
Authorized Agent Bank (AAB) within the territorial jurisdiction of the RDO
which has jurisdiction over the residence or principal place of business of the
taxpayer or where the property is located in case of sale of real property or
where the Collection Agent is assigned.
In places where there is no Authorized Agent Bank:
 Revenue Collection Officer or
 Duly authorized City or Municipal Treasurer
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Documentary Stamp Tax
Various Instruments
Before TRAIN

Instrument Tax Rate Tax Rate


a. Original issuance of shares of stock P1.00 on each P200.00 of the P2.00 on each P200.00 of the
par value par value
b. Sales, agreements to sell, memoranda of P0.75 on each P200.00 of the P1.50 on each P200.00 of the
sales, deliveries or transfer of shares or par value par value
certificates of stock
c. Certificates of profits or interest in property P0.50 on each P200.00 of the P1.00 on each P200.00 of the
or accumulations face value face value
d. Bank checks, drafts, certificates of deposit P1.50 each P3.00
not bearing interest, and other instruments

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Documentary
Various Instruments
Stamp Tax
Before TRAIN

Instrument Tax Rate Tax Rate

e. All debt instruments P1.00 on each P200.00 of the P1.50 on each P200.00 of the
issue price issue price
f. All bills of exchange or drafts P0.30 on each P200.00 of the P0.60 on each P200.00 of the
face value face value
g. Upon acceptance of bills of exchange and P0.30 on each P200.00 of the P0.60 on each P200.00 of the
others face value face value
h. Foreign bills of exchange and letters of P0.30 on each P200.00 of the P0.60 on each P200.00 of the
credit face value face value

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Documentary Stamp Tax
Life Insurance Policies Before TRAIN

Instrument Tax Rate Tax Rate


i. Life insurance policies P0.50 on each
P200.00 of the
premium collected
If the amount of insurance does not exceed P100,000 n/a Exempt
If the amount exceeds P100,000 but does not exceed n/a P20.00
P300,000
If the amount exceeds P300,000 but does not exceed n/a P50.00
P500,000
If the amount exceeds P500,000 but does not exceed n/a P100.00
P750,000
If the amount exceeds P750,000 but does not exceed P n/a P150.00
1,000,000
If the amount exceeds P 1,000,000 n/a P200.00

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Documentary
Various Instruments
Stamp Tax
Before TRAIN

Instrument Tax Rate Tax Rate


j. Policies of annuities P0.50 on each P200.00 of the P1.00 on each P200.00 of the
premium payment premium payment
k. Policies of pre-need plans P0.20 on each P200.00 of the P0.40 on each P200.00 of the
premium collected premium collected
l. Certificates P15.00 each P30.00 each
m. Warehouse receipts P15.00 each P30.00 each
n. Jai-alai, horse race tickets, lotto or other P0.10 each; If cost exceeds P0.20 each; If cost exceeds
authorized numbers games P1.00, an additional P0.10 on P1.00, an additional P0.20 on
every P1.00 collected every P1.00 collected

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Documentary Stamp Tax
Various Instruments
Before TRAIN

Instrument Tax Rate Tax Rate


o. Bills of lading or receipts P1.00 each if value exceeds P2.00 each if value exceeds
P100 but does not exceed P100 but does not exceed
P1,000 ; P1,000;

P10.00 if value exceeds P1,000 P20.00 if value exceeds


P1,000
p. Proxies P15.00 each P30.00 each
q. Powers of Attorney P5.00 each P30.00 each
r. Leases and other hiring agreements P3.00 on first P2,000 and P6.00 on first P2,000 and
additional P1.00 for every additional P2.00 for every
P1,000 in excess of first P2,000 P1,000 in excess of the first
P2,000

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Documentary Stamp Tax
Various Instruments
Before TRAIN

Instrument Tax Rate Tax Rate


s. Mortgages, pledges and deeds of trust P20.00 if amount secured P40.00 if amount secured
does not exceed P5,000 and does not exceed P5,000 and
additional P10.00 on each additional P20.00 on each
P5,000 in excess of first P5,000 in excess of first
P5,000 P5,000
t. Deeds of sale, conveyances and donation of P15.00 if amount received Same rate
real property does not exceed P1,000 and “Transfers exempt from
additional P15.00 on each donor’s tax under Section
P1,000 in excess of first P1,000 101(a)(b) of this Code shall
be exempt from this tax”

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Documentary Stamp Tax
Various Instruments
Before TRAIN

Instrument Tax Rate Tax Rate


u. Charter parties and similar instruments If tonnage does not exceed If tonnage does not exceed
1,000 tons and duration of 1,000 tons and duration of
charter does not exceed 6 charter does not exceed 6
months – P500.00 months – P1,000.00
On each month in excess of On each month in excess of
first 6 months – additional tax first 6 months – additional
of P50.00 tax of P100.00

If tonnage exceeds 1,000 tons If tonnage exceeds 1,000 tons


and does not exceed 10,000 and does not exceed 10,000
tons, and duration of charter tons, and duration of charter
does not exceed 6 months – does not exceed 6 months –
P1,000.00 P2,000.00
On each month in excess of On each month in excess of
first 6 months – additional tax first 6 months – additional
of P100.00 tax of P200.00

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Documentary
Various Instruments
Stamp Tax
Before TRAIN

Instrument Tax Rate Tax Rate


u. Charter parties and similar instruments – If tonnage exceeds 10,000 If tonnage exceeds 10,000
cont’d. tons and duration of charter tons and duration of charter
does not exceed 6 months – does not exceed 6 months –
P1,500.00 P3,000.00
On each month in excess of On each month in excess of
first 6 months – additional tax first 6 months – additional
of P150.00 tax of P300.00

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“Debt Instrument” shall mean instruments representing borrowing and lending
transaction including but not limited to:
 debentures,
 certificates of indebtedness,
 due bills,
 bonds,
 loan agreements, including those signed abroad wherein the object of the contract is located or
used in the Philippines,
 instruments and securities issued by the government or any of its instrumentalities
 deposit substitute debt instruments,
 certificates or other evidences of deposits that are drawing instrument significantly higher than
the regular savings deposit taking into consideration the size of the deposit and the risks involved,
 certificates or other evidences of deposits that are drawing interest and having a specific maturity
date,
 promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.

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M.J. Lhuillier Pawnshop v. CIR, G.R. No. 166786, May 3, 2006
• The onus of proving that pawnshops are not subject to DST is thus shifted to petitioner. In
establishing tax exemptions, it should be borne in mind that taxation is the rule, exemption is the
exception. Accordingly, statutes granting tax exemptions must be construed in strictissimi juris
against the taxpayer and liberally in favor of the taxing authority. One who claims an exemption
from tax payments rests the burden of justifying the exemption by words too plain to be mistaken
and too categorical to be misinterpreted.

• In the instant case, there is no law specifically and expressly exempting pledges
entered into by pawnshops from the payment of DST. Section 199 of the NIRC
enumerated certain documents which are not subject to stamp tax; but a pawnshop
ticket is not one of them. Hence, petitioners nebulous claim that it is not subject to DST
is without merit. It cannot be over-emphasized that tax exemption represents a loss of
revenue to the government and must, therefore, not rest on vague inference. Exemption
from taxation is never presumed. For tax exemption to be recognized, the grant must be
clear and express; it cannot be made to rest on doubtful implications.

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Exempt papers/documents from DST:
• Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or
cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely
by the members thereof for the exclusive benefit of each member and not for profit
• Certificates of oaths administered by any government official in his official capacity or acknowledgement by any
government official in performance of his official duty
• Written appearance in any court by any government official in his official capacity
• Certificates of the administration of oaths to any person as to the authenticity of any paper required to be filed
in court by any person or party thereto, whether the proceedings be civil or criminal
• Papers and documents filed in court by or for the national, provincial, city or municipal governments
• Affidavits of poor persons for the purpose of proving poverty
• Statements and other compulsory information required of persons or corporations by the rules and regulations
of the national, provincial, city or municipal government exclusively for statistical purposes and which are wholly for
the use of the Bureau or office in which they are filed, and not at the instance or for the use or benefit of the person
filing them
• Certified copies and other certificates placed upon documents, instruments and papers for the national,
provincial, city or municipal governments made at the instance and for the sole use of some other branch of the
national, provincial, city or municipal governments
• Certificates of the assessed value of lands, not exceeding P200 in value assessed, furnished by the provincial, city
or municipal Treasurer to applicants for registration of title to land
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Exempt papers/documents from DST:
• Borrowing and lending of securities executed under the Securities Borrowing and Lending Program of a registered exchange, or
in accordance with regulations prescribed by the appropriate regulatory authority
• Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos (P250,000),
or any such amount as may be determined by the Secretary of Finance, executed by an individual for his purchase on installment
for his personal use or that of his family and not for business or resale, barter or hire of a house, lot, motor vehicle, appliance or
furniture:
• Sale, barter or exchange of shares of stock listed and traded through the local stock exchange (R.A 9648)
• Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any agreement, contract,
charter, or any evidence of obligation or indebtedness, if there is no change in the maturity date or remaining period of coverage
from that of the original instrument.
• Fixed income and other securities traded in the secondary market or through an exchange.
• Derivatives: Provided, That for purposes of this exemption, repurchase agreements and reverse repurchase agreements shall be
treated similarly as derivatives
• Interbranch or interdepartmental advances within the same legal entity
• All forebearances arising from sales or service contracts including credit card and trade receivables: Provided, That the
exemption be limited to those executed by the seller or service provider itself.
• Bank deposit accounts without a fixed term or maturity
• All contracts, deeds, documents and transactions related to the conduct of business of the Bangko Sentral ng Pilipinas
• Transfer of property pursuant to Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended
• Interbank call loans with maturity of not more than seven (7) days to cover deficiency in reserves against deposit liabilities,
including those between or among banks and quasi-banks 19
What is Electronic Documentary Stamp Tax
(eDST) System? (sec. 5 (1), RR No. 7-2009)

• The eDST is a web-based application created for taxpayers and the BIR that
is capable of affixing a secured documentary stamp on the taxable
documents as defined under the appropriate provisions under Title VII of
the National Internal Revenue Code of 1997, as amended, thru the use of a
computer unit, any laser printer with at least 1200 dpi resolution, and
Internet Explorer 7.0 It is also capable of providing a 3-layer watermark on
stamps for added security.

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Is DST Law applicable on Electronic
Documents? (sec. 10, RR No. 13-2004)
• Yes. The DST rates as imposed under the Code, as amended by R.A. 9243
shall be applicable on all documents not otherwise expressly exempted by the
said law, notwithstanding the fact that they are in electronic form. As
provided for by R.A. 8792, otherwise known as the Electronic Commerce
Act, electronic documents are the functional equivalent of a written
document under existing laws, and the issuance thereof is therefore
tantamount to the issuance of a written document, and therefore subject to
DST.
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Is any document, transaction or arrangement entered into under
Financial Lease subject to Documentary Stamp Tax? (RMC No. 46-2014)

• Yes. Financial lease is akin to a debt rather than a lease. A nature of an


obligation than a lease of personal property. The mere act of extending
credit is already a means of facilitating an obligation or advancing in behalf
of the lessee certain property in lieu of cash in exchange for a definitive
amortization to be paid to the lessor with profit margin included. Section 179
of the NIRC, as amended, covers all debt instruments. Therefore, being a
nature of an obligation, any document, transaction or arrangement entered
into under financial lease is subject to DST under such Section of the NIRC,
as amended.
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Percentage Tax
Other percentage tax
Stock transaction tax
Compliance Requirement

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OTHER PERCENTAGE TAX (OPT)
• Percentage Tax on Domestic Carriers and Keepers of Garages
• Percentage Tax on International Carrier
• Franchise Taxes
• Tax on Overseas Communication
• Tax on Banks and Non-bank Financial Intermediaries Performing Quasi-Banking Functions
• Tax on Life Insurance Premiums
• Tax on Agents of Foreign Insurance Companies
• Amusement Taxes
• Tax on Winnings
• Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded Through the Local Stock
Exchange or Through Initial Public Offering
• Return and Payment of Percentage Tax
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Other Percentage Tax
3% percentage tax on persons
exempt from VAT - gross annual
sales/receipts does not exceed P3M
(previously P1,919,500)

Stock transaction tax (STT) on listed


shares – 0.60 of 1% (previously 0.50
of 1%)
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Percentage Tax - Compliance Requirement

BEFORE (by regulations) TRAIN


Monthly Filing  Quarterly filing/payment -
 20th day after end of month (for 25th month following the
non-EFPS filers) close of the taxable quarter
 21st to 25th day after end of month
(filing thru EFPS), payment on 25th
day end of month  Monthly filing/payment

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Percentage Tax - Compliance Requirement
BIR Advisories, dated Feb. 8 & 19, 2018
Quarterly Percentage Tax Return Q

Filing and payment of percentage tax of the following taxpayers shall be due
on a quarterly basis on or before 25th day of the month following the close of
the taxable quarter
 VAT-exempt taxpayers with annual revenues up to P3M
 Domestic carriers and keepers of garages
 International air/shipping carriers
 Franchisees of gas or water utilities
 Franchisees of radio and/or TV broadcasting with revenues up to P10M
 Banks, non-bank financial intermediaries and finance companies
 Life insurance companies/Agent of foreign insurance companies
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Percentage Tax - Compliance Requirement
BIR Advisories, dated Feb. 8 & 19, 2018

Remittance of withholding VAT and other percentage tax withheld shall still
be on a monthly basis.

Due on or before 10th day of the following month

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Coverage Basis Tax Rate
Persons exempt from VAT under Sec. 116 Gross Sales or Receipts 3%
Domestic carriers and keepers of garages Gross Receipts 3%
International Carriers:
International air/shipping carriers doing business in the Gross Receipts 3%
Philippines
Franchise Grantees:
Electric , gas and water utilities Gross Receipts 2%
Radio and television broadcasting companies whose Gross Receipts 3%
annual gross receipts of the preceding year do not
exceed P 10,000,000 and did not opt to register asVAT
taxpayer
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Coverage Basis Tax Rate
Tax on overseas dispatch, message or conversation Amount paid for the service 10%
originating from the Philippines (Section 120) (paid by the person availing the
service to the person rendering
(by telephone, telegraph, telewriter exchange, wireless
the service)
and other communication services)

Exemptions from Section 120:

1. Government
2. Diplomatic Services
3. International Organizations
4. News Services

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Interest, commissions and discounts from lending
activities as well as income from finance lease on the
basis of remaining maturities of instruments:

 Short term maturity (5 years or less) 5%


 Maturity period is more than 5 years 1%
Banks and non-bank
financing intermediaries  On Dividends and equity shares in net income of 0%
subsidiaries
 On royalties, rentals of properties, real or personal, 7%
profits from exchange and all other items treated as
gross income under Sec. 32 of the Code
 On Net Trading Gains within the taxable year on 7%
foreign currency, debt securities, derivatives and
other similar financial instruments
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On interest, discounts and other items of gross income 5%
paid to finance companies and other financial
intermediaries not performing quasi banking functions
Other non-bank Finance
Interest, commissions and discounts paid from their loan
Intermediaries (Sec. 122)
transactions from finance companies as well as income
from financial leasing shall be taxed based on the
remaining maturities of instruments:
• maturity period is 5 years or less 5%
• maturity period is more than 5 years 1%
Life Insurance Companies (except Total premiums collected 2%
purely cooperative companies or
associations) (Sec 123)
Agents of foreign insurance Total premiums collected Twice as the tax
companies (Sec. 124) (except imposed in Section
reinsurance premium) 123
In all cases, where owners of property Premiums paid 5%
obtain insurance directly with foreign
companies (without use of any
agent) 32
AMUSEMENT TAXES
Proprietors, lessee or operator of the following:

Cockpits Gross receipts 18%


Cabarets, Night or Day Clubs Gross receipts 18%
Boxing exhibitions (Except: World or oriental championship is at Gross receipts 10%
stake AND one of the contenders if Filipino citizen promoted by the
Filipino citizen of Philippine Corporation.
Professional basketball games Gross receipts 15%
Jai-alai and race track (operators shall withheld tax on winnings) Gross receipts 30%
irrespective of whether or not ny amount is charged for
admission.

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Every stock broker who effected a Gross selling price or gross value in .6 of 1%
sale, barter, exchange or other money of shares of stocks sold, bartered,
disposition of shares of stock listed exchanged or otherwise disposed
and traded through the Local Stock
Exchange (LSE) other than the sale by
a dealer in securities
A corporate issuer/stock broker, GSP or gross value of in money of shares
whether domestic of foreign, engaged of stocks sold, bartered, exchanged or
in the sale, barter, exchange or other otherwise disposed in accordance
disposition through Initial Public with the proportion of stocks sold,
Offering (IPO)/secondary public bartered or exchanged or after listing in
offering of shares of stock in closely the stock exchange
held corporations
• Up to 25 % 4%
• Over 25% but not over 33 1/3% 2%
• Over 33 1/3 % 1%
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Closely Held Corporations (Section 127)

• Any corporation at least 50% in value of the outstanding capital


stock or at least 50% of the total combined voting power of all
classes of stock entitled to vote is owned directly or indirectly by or
for not more than twenty (20) individuals

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When and where to file OPT return?
WHEN: within 25 days after the end of each taxable quarter (except
cancellation of VAT registration—OP tax accrues from the date of
cancellation)
Persons retiring from business subject to business tax must notify the nearest
RDO, file his return and pay the tax within 20 days after closing the business.
NOTE: Commissioner by a revenue regulation may prescribe manner and time
for filing.
WHERE: AAB’s, RDO, or duly authorized treasurer of the city or municipality.
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END

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