DST on lease agreements

If you will be leasing out your property, DST will be imposed at the rate of P3.00 for the
first P2,000.00 and an additional P1.00 for every P1,000.00 in excess of the first
P2,000.00 pursuant to Section 194 of the Tax Code, to wit:

“Section 194. Stamp tax on Leases and Other Hiring Agreements. – On each lease,
agreement, memorandum, or contract for hire, use or rent of any lands or tenements, or
portions thereof, there shall be collected a documentary stamp tax of Three pesos
(P3.00) for the first Two thousand pesos (P2,000), or fractional part thereof, and an
additional One peso (P1.00) for every One Thousand pesos (P1,000) or fractional part
thereof, in excess of the first Two thousand pesos (P2,000) for each year of the term of
said contract or agreement.”

To compute DST, multiply the monthly rent by 12 months and then by the number of
years stated in the contract. Subtract P2,000.00 and multiply the amount by .001, then
add P3.00.

For example, the monthly rent is P10,000.00, and the contract is for 3 years. The DST is
computed as follows:

Monthly rent P10,000.00

Multiply by 12 months
Annual rent = P120,000.00
Multiply by 3 years
Total contract amount = P360,000.00
Subtract P2,000 = P358,000.00
Multiply this by .001 = P358
Plus P3.00
DST = P361.00

As a shortcut, multiply the contract amount by .001 and add P1.00 to get the DST.

If the total contract amount is not a multiple of P1,000.00, for example, it’s P360,500.00,
round it up to the next 1,000 then multiply the contract amount by .001 and add P1.00 to
get the DST.