Summary
RMC No. 73-2007 re-issues the guidelines on the treatment of block sales of shares of stock disposed of through the Stock Exchange.
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Key points
- Taxable prearranged sales. A sale of shares where the sale is prearranged or the buyer is predetermined is taxable under Section 24(C), 25(A)(3), 25(B), 27(D)(2), 28(A)(7)(c) or 28(B)(5)(c) of the Tax Code, as amended. This holds even if the transaction passed through the Stock Exchange or its facility was used.
- Excluding the public. Any transaction that by any means excludes the public from taking part in the trading is taxed under those provisions.
- Block sale defined. The Circular expressly covers, but is not limited to, block sales. The Securities Regulation Code implementing rules define a block sale as a matched trade that bypasses the automated order matching system and is prearranged among the Broker Dealer’s clients, then entered as a done deal in the trading system.
Who is affected
- Sellers of shares of stock in prearranged or block sales
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
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