Law to remove documentary stamp tax on Philippine Stock Trading signed

The Philippine President signed Republic Act 9648 into law, which permanently removes the documentary stamp tax on the secondary trading of shares in the Philippine Stock Exchange. The documentary stamp tax is a P 0.75 tax imposed on every P200 par value on the secondary trading of shares of stocks. This was done to encourage investors to invest their money in the local stock market.

When trading in the Philippine Stock Market, investors will have to pay a plethora of charges, duties and taxes, so the removal of the documentary tax was a welcome respite.

Aside from those duties, an investor will usually have to pay a brokerage commission of a maximum of 1.5 percent of the transaction cost. Then there is the 12-percent value added tax, a transfer fee of P100 plus 12-percent VAT and a cancellation fee of P20 plus 12-percent VAT.

During the deliberation at the Senate, Sen. Panfilo Lacson remarked:

First, the tax was very cumbersome to compute. Even the Finance department and Philippine Stock Exchange cannot agree on the amount in terms of foregone revenue. Second, it made the stock exchange uncompetitive because it was like a second tax on top of the stock transaction tax [source]

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