RMC No. 6-2022: Clarifies the Documentary Stamp Tax imposed under Section 175 of the 1997 Tax Code, as amended, on transfer of shares of stocks

Summary

RMC No. 6-2022 clarifies the Documentary Stamp Tax (DST) imposed under Section 175 of the 1997 Tax Code, as amended, on transfers of shares of stock.

Key points

1. Nature of the DST. The DST is levied on the exercise of certain privileges conferred by law for creating, revising or terminating specific legal relationships through specific instruments, and is in the nature of an Excise Tax.
2. Transfers subject to DST. Transfers of shares of stock under a Deed of Donation, and under a Will of the decedent approved by the probate court in a Judicial Settlement of Estate, are subject to DST under Section 175.
3. Intestate succession. Generally, transfer of shares from the decedent’s estate to the heirs through intestate succession, without a Will, is not subject to DST. Ownership passes to the heirs by operation of law.
4. Waiver or renunciation. If an heir specifically waives or renounces his or her share in a Judicial or Extra-Judicial Settlement of Estate without a Will, the waived shares transferred to another heir are subject to DST under Section 175. In that case the rules in RMC No. 94-2021 apply.

Who is affected

• Transferors and transferees of shares of stock by donation or succession
• Heirs who waive or renounce their share of inherited shares

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.