RMC No. 21-2008: Clarifies issues on the persons liable to the tax imposed under Section 127 of the Tax Code and the crediting of tax collection to the appropriate office of the BIR

Key points

1. Section 127(A). The stock broker files the return (BIR Form 2552) and pays the tax after collecting it from the seller, within five (5) banking days from collection. The tax is credited to the BIR office with jurisdiction over the stockbroker.
2. Section 127(B) liability. In a primary offering, the issuing corporation is liable. In a secondary offering, the seller is primarily liable. The Philippine Stock Exchange defines primary offering as the original sale by the applicant company of its own securities, and secondary offering as a sale by existing shareholders of already issued securities.
3. Computing the tax. The proportion of shares sold over the outstanding shares after listing determines the applicable rate (e.g. 4%, 2% or 1%). That rate is multiplied by the Gross Selling Price (GSP) or Gross Value in Money (GVM).
4. Payment and crediting. For a primary offering, the tax is paid within 30 days from the date of sale and credited to the BIR office with jurisdiction over the issuing corporation. For a secondary offering, the time and manner of payment follow the Section 127(A) procedures.

Who is affected

• Stock brokers
• Issuing corporations in primary offerings
• Sellers in secondary offerings

Deadlines and effectivity

• Section 127(A): within five (5) banking days from collection
• Primary offering: within 30 days from date of sale