Documentary Stamp Tax (DST) in the Philippines

Documentary Stamp Tax (DST) in the Philippines is imposed on certain documents, instruments, loan agreements, and papers evidencing the acceptance, assignment, sale, or transfer of an obligation, right, or property. The DST is a fixed amount or percentage based on the type and value of the document or transaction. Here are some common transactions and their corresponding DST rates:

Common Transactions and DST Rates

1. Deed of Sale of Real Property
   • Rate: PHP 15.00 for every PHP 1,000.00 or fraction thereof of the consideration, including the fair market value or zonal value, whichever is higher.
   • Example: If the selling price is PHP 5,000,000:
     $$\text{DST}=\left(\frac{5,000,000}{1,000}\right)\times 15=75,000$$
2. Sale or Transfer of Shares of Stock
   • Rate: PHP 1.50 for every PHP 200.00 or fraction thereof of the par value of the shares.
   • Example: If the par value of the shares is PHP 1,000,000:
     $$\text{DST}=\left(\frac{1,000,000}{200}\right)\times 1.50=7,500$$
3. Loan Agreements and Promissory Notes
   • Rate: PHP 1.00 for every PHP 200.00 or fraction thereof of the loan amount.
   • Example: If the loan amount is PHP 500,000:
     $$\text{DST}=\left(\frac{500,000}{200}\right)\times 1=2,500$$
4. Leases and Other Hiring Agreements
   • Rate: PHP 3.00 for the first PHP 2,000.00 and an additional PHP 1.00 for every PHP 1,000.00 or fraction thereof in excess of PHP 2,000.00 for each year of the term.
   • Example: If the rental amount is PHP 50,000 for a one-year lease:
     $$\text{DST}=3+\left(\frac{50,000-2,000}{1,000}\right)\times 1=3+48=51$$

Additional Points

• Payment: The DST must be paid to the Bureau of Internal Revenue (BIR) either at the time the document is issued, accepted, or transferred.
• Forms: Specific BIR forms are used to file and pay the DST, such as BIR Form 2000 for one-time transactions and BIR Form 2000-OT for transactions not covered by regular payments.
• Exemptions: Certain transactions may be exempt from DST, such as the issuance of shares by a corporation to its stockholders or certain government documents.

Example Computation

Sale of Real Property

Scenario:

• Selling Price: PHP 8,000,000
• Fair Market Value: PHP 7,500,000 (higher than zonal value)

Computation:

• Determine the basis for DST: the higher of the selling price or fair market value.
  • In this case, the selling price of PHP 8,000,000 is higher.
• Compute the DST:
  $$\text{DST}=\left(\frac{8,000,000}{1,000}\right)\times 15=120,000$$

Result:

• The Documentary Stamp Tax on the sale of this real property would be PHP 120,000.

Loan Agreement

Scenario:

• Loan Amount: PHP 1,200,000

Computation:

• Compute the DST:
  $$\text{DST}=\left(\frac{1,200,000}{200}\right)\times 1=6,000$$

Result:

• The Documentary Stamp Tax on this loan agreement would be PHP 6,000.

Understanding these rates and computations helps ensure compliance with Philippine tax laws and proper financial planning for transactions involving significant documents and agreements.