Chapter 5

Documentary Stamp Tax

 Documentary Stamp Tax

Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers
evidencing the acceptance, assignment, sale or transfer of an obligation, right or property
incident thereto.

Person Liable
It is imposed against the person making, signing, issuing, accepting or transferring the
document or facility evidencing the transactions. Thus, in general, it may be imposed on
the transaction itself or upon the document underlying such act. Any of the parties
thereto shall be liable for the full amount of the tax due. As between themselves, the said
parties may agree on who shall be liable or how they may share on the cost of the tax.

If one party is exempt from DST

Whenever one of the parties to the taxable transaction is exempt from the DST, the other
party thereto, who is not exempt shall be the one directly liable for the tax.

 Transactions Subject To Documentary Stamp Tax

Tax Document Taxable Unit Tax Due % of Taxable Base
Code Per Unit Unit
Section
174 Original Issue of ₱200.00 or fraction thereof 2.00 1% Par value of shares
Shares of Stock with of stocks
par value

Original Issue of ₱200.00 or fraction thereof 2.00 1% Actual consideration

Shares of Stock for the issuance of
without par value shares of stocks

Stock Dividend ₱200.00 or fraction thereof 2.00 1% Actual value

represented by each
share
175 Sales, Agreements ₱200.00 or fraction thereof 1.50 0.75% Par value of such
to Sell, Memoranda stock
of Sales, Deliveries
or Transfer of
Shares or
Certificates of Stock

Stock without par 50% DST paid upon the

value original issuance of
said stock.
176 Bonds, Debentures, ₱200.00 or fraction thereof 0.75 0.375% Par value of such
Certificate of Stock bonds, debentures,
or Indebtedness Certificate of Stock
issued in foreign or Indebtedness
Countries
177 Certificate of Profits ₱200.00 or fraction thereof 1.00 0.5% Face value of such
or Interest in certificates /
Property or memorandum
Accumulation
178 Bank Checks, On each Document 3.00
Drafts, Certificate of
Deposit not bearing
interest and other
Instruments
179 All Debt Instruments ₱200.00 or fraction thereof 1.50 0.75% Issue price of any
such debt
instruments or a
fraction of 365 days
for instrument with
term of less than 1
year
180 All Bills of Exchange ₱200.00 or fraction thereof 0.60 0.3% Face value of any
or Drafts such bill of exchange
or draft
181 Acceptance of Bills ₱200.00 or fraction thereof 0.60 0.3% Face value of such
of Exchange or bill of exchange or
order for the order or the

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payment of money Philippine equivalent

purporting to be of such value, if
drawn in a foreign expressed in foreign
country but payable currency
in the Philippines
182 Foreign Bills of ₱200.00 or fraction thereof 0.60 0.3% Face value of such
Exchange and bill of exchange or
Letters of Credit letter of credit or the
Philippine equivalent
of such value, if
expressed in foreign
currency
183 Life Insurance If the amount of insurance exempt Amount of Insurance
Policies does not exceed ₱100,000

If the amount of insurance 20.00 Amount of Insurance

exceeds ₱100,000 but does
not exceed ₱300,000

If the amount of insurance 50.00 Amount of Insurance

exceeds ₱300,000 but does
not exceed ₱500,000

If the amount of insurance 100.00 Amount of Insurance

exceeds ₱500,000 but does
not exceed ₱750,000

If the amount of insurance 150.00 Amount of Insurance

exceeds ₱750,000 but does
not exceed ₱1,000,000

If the amount of insurance 200.00 Amount of Insurance

exceeds ₱1,000,000
184 Policies Of ₱4.00 premium or fraction 0.50 12.5% Premium charged
Insurance upon thereof
Property
185 Fidelity Bonds and ₱4.00 premium or fraction 0.50 12.5% Premium charged
other Insurance thereof
Policies
186 Policies of Annuities ₱200.00 or fraction thereof 1.00 0.5% Premium or
or other installment payment
instruments or contract price
collected

Pre-Need Plans ₱200.00 or fraction thereof 0.40 0.20% Premium or

contribution
collected
187 Indemnity Bonds ₱4.00 or fraction thereof 0.30 7.5% Premium charged
188 Certificates of Each Certificate 30.00
Damage or
otherwise and
Certificate or
document issued
by any customs
officers, marine
surveyor, notary
public and
certificate required
by law or by rules
and regulations of a
public office
189 Warehouse Receipts Each Receipt 30.00
(except if value does
not exceed ₱200.00)
190 Jai-alai, Horse Race ₱1.00 and below cost of ticket 0.20 20% Cost of the ticket
Tickets, lotto or
Other Authorized
Number Games Additional ₱0.20 on every Cost of the ticket
₱1.00 or fraction thereof if
cost of ticket exceeds ₱1.00

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191 Bills of Lading or If the value of such goods 2.00 Value of such goods
Receipts(except exceeds ₱100 and does not
charter party) exceed ₱1,000

If the value exceeds ₱1,000 20.00 Value of such goods

Freight tickets covering Exempt

goods, merchandise or
effects carried as
accompanied baggage of
passengers on land and
water carriers primarily
engaged in the transportation
of passengers
192 Proxies (except Each proxy 30.00
proxies issued
affecting the affairs
of associations or
corporations,
organized for
religious, charitable
or literary purposes)
193 Powers of Attorney Each Document 10.00
(except acts
connected with the
collection of claims
due from or accruing
to the Government
of the Republic of
the Philippines, or
the government of
any province, city or
Municipality)
194 Leases and other First 2,000 or fractional part 6.00 0.3%
Hiring agreements or thereof
memorandum or
contract for hire, use
or rent of any lands 2.00 0.2%
or tenements or For every ₱1,000 or fractional
portions thereof part thereof in excess of the
first ₱2,000 for each year of
the term of the said contract
or agreement
195 Mortgage or Pledge First 5,000 40.00 0.8% Amount Secured
of lands, estate, or
property and Deeds On each ₱5,000 or fractional 20.00 0.4% Amount Secured
of Trust part thereof in excess of
5,000
196 Deed of Sale, First 1,000 15.00 1.5% Consideration or Fair
Conveyances, Market Value,
Donations of Real whichever is higher
Property (except (if government is a
grants, patents or party, basis shall be
original certificate of the consideration)
adjudication issued
by the government) For each additional ₱1,000 or 15.00 1.5% Consideration or Fair
fractional part thereof in Market Value,
excess of ₱1,000 whichever is higher
(if government is a
party, basis shall be
the consideration)
197 Charter parties and Charter parties and similar
Similar Instruments instruments if gross tonnage
of the ship, vessel or steamer
is:

1,000 tons and below 1st 6 months Registered gross

₱1,000 tonnage
In excess +
₱100

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1,001 to 10,000 tons 1st 6 months Registered gross

₱2,000 tonnage
In excess +
₱200

Over 10,000 tons 1st 6 months Registered gross

₱3,000 tonnage
In excess +
₱300
198 Stamp Tax on At the same
Assignments and rate as that
Renewals or imposed on
Continuance of the original
Certain Instruments instrument.

 DST on Original Issuance of Shares

It is imposed on the privilege of issuing shares of stock. The shares are considered issued
upon the acquisition of the stockholder of the attributes of ownership over the shares (the
right to vote, the right to receive dividends, the right to dispose, etc., notwithstanding the
restrictions on the exercise of any of these rights may be imposed by the Corporation's
articles and by-laws, the SEC, stockholder agreement, court order, etc.) which acquisition
of such attributes of ownership shall be manifested by the acceptance by the Corporation
of the stockholder's subscription to its shares of stock.

The entire shares of stock subscribed are considered issued for the purpose of the DST,
even if not fully paid. The delivery of the certificates of stock to stockholders is not
essential for the DST to accrue.

Illustration
An investor wishes to invest in a domestic company registered here in the Philippines. The
investor will be purchasing the shares as an original issuance from the Philippine entity,
not from an existing shareholder. The investor wishes to purchase 100,000 shares of stock
in the Philippine entity at their par value of ₱100 per share.

Original issuance of stock (100,000 x ₱100) ₱10,000,000

Divide by………………………………………. / ₱200
50,000
Multiply by…………………………………….. x ₱2
DST……………………………………………. ₱100,000

 DST on Transfer of Shares

All transfers of shares of stock are subject to DST upon execution of the deed transferring
ownership or rights thereto, or upon delivery, assignment or indorsement of such shares in
favor of another. No transfer of shares stock shall be recorded unless the DST thereon
has been duly paid for.

Actual or constructive transfer necessary

For a sale or exchange to be taxable there must be an actual or constructive transfer of
beneficial ownership of the shares of stock from person to another. Such transfer may be
manifested by the clear exercise of attributes of ownership over such stocks by the
transferee, or by an actual entry of a change in the name appearing in the certificate of
stock or in the Stock and Transfer Book of the issuing corporation or by any entry
indicating transfer of beneficial ownership in any form of registry including those of a duly
authorized scripless registry, such as those maintained by the PSE.

Transfer to new trustee- exempt

If by the transfer of certificates of stock from a resigned trustee to a newly appointed
trustee such certificate of stock remains in the name of the cestui que trust or the resigned
trustee so that the new trustee is constituted as mere depository of the stock such transfer
is not taxable.

Transfer of shares to "nominees- exempt

Transfer of shares to "nominees qualify them to sit in the board or to qualify them to
perform any act in duly relation to the corporation shall not be subject to DST upon proof
of a duly executed Nominee Agreement showing the purpose of the transfer; that the
transfer is without consideration other than the undertaking of the nominee to only
represent the beneficial owner of the stock; and the transfer is in trust.

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Agreements to sell shares of stock- taxable

Agreements to sell shares of stock are also subject to DST. It is not only actual sales or
transfers that are taxable, but also agreements to sell such stock or executory contracts
for the sale or transfer of shares of stock. However, if the DST has been paid on the
agreement to sell or memoranda of sale, the actual sale or transfer of the stocks pursuant
to the agreement will no longer be subject to DST.

 All Debt Instruments

Representing borrowing and lending transactions are now covered and subject to DST.
"Debentures and certificates of indebtedness" and "due bills and certificates of obligation"
used to be found under separate provisions are now incorporated under this classification
and rate.

"Debt Instrument" shall mean instruments representing borrowing and lending transactions
including but not limited to:
a. Debentures
b. Certificates of Indebtedness
c. Due Bills
d. Bonds
e. Loan Agreements, including those signed abroad wherein the object of the contract
is located or used in the Philippines
f. Instruments and Securities issued by the Government or any of its instrumentalities
g. Deposit Substitute Debt Instruments
h. Certificates or Other Evidence of Deposits that are drawing interest significantly
higher than the regular savings deposit taking into consideration the size of the
deposit and the risks involved
i. Certificates or Other Evidence of Deposits that are drawing interest and having a
specific maturity date
j. Orders for payment of any sum of money otherwise than at sight or on demand
k. Promissory Notes, whether negotiable or non-negotiable, except bank notes issued
for circulation.

Sale of Debt Instruments in the Secondary Market – exempt

The DST on debt instruments shall be imposed only on every original issue and the tax
shall be based on the issue price thereof. Hence, sale of debt instruments in the
secondary market will not be subject to the DST.

Computation of DST
1. If the term of the debt instrument is less than 1 year, the DST shall be computed
taking into consideration the number of days that the instrument is outstanding as
a fraction of 365 days.

Illustration
In 2021, a promissory note in the amount of ₱100,000 issued with a term of 90
days. What is the amount of the documentary stamp tax?

Promissory note ……………………… ₱100,000

Divide by…………………………….. / ₱200
500
Multiply by…………………………… x ₱1.50
₱750
Multiply and divide by………………. x 90/365
DST……………………………………….. ₱185

2. If the term is 1 year or longer, the DST due shall be computed based on the issue
price of the debt instrument.

Illustration
In 2021, a promissory note in the amount of ₱100,000 is issued with a term of 2
years. What is the amount of the documentary stamp tax?

Promissory note ……………………… ₱100,000

Divide by…………………………….. / ₱200
500
Multiply by…………………………… x ₱1.50
DST……………………………………….. ₱750

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Deposits subject to DST

1. Those with a fixed or a specific maturity date (e.g. time deposits) or the interest
varies depending on the duration/term (number of days) of the deposit,
irrespective of the nomenclature and whether covered by a certificate, passbook
or any other evidence of deposit.
2. Those that provide interest significantly higher than the rate given to a regular
savings/demand deposit account.
3. Those with a higher interest yield than that given to savings deposit or where the
interest rate earned by such deposit is reduced upon termination.

"Significantly Higher" connotes that the interest rate is at least 50% higher than the
lowest interest rate given by the bank or financial institution on any of its deposit,
whether the same be savings/demand deposit.

Deposits not subject to DST

Regular or ordinary demand and savings deposits which are withdrawable upon demand
by the depositor AND earning rates of interest based on prevailing market rates,
irrespective of the amount deposited.

 DST - on Life Insurance

The DST on life insurance policies shall be due and collected every time there is an
insurance premium collection on such policy, including premiums paid/collected beyond
the year the policy was and d take out.

“Insurance Premium Collection" shall include not only those premiums paid or remitted by
the insured directly but shall also include premiums paid for by applying cash surrender
value, dividend earned, other modes of payment, or whether on the original policy or
amendments thereto.

Increase in coverage from year to year or additional riders attached to existing policy shall
be deemed a new issuance and premiums relating thereto whether paid or remitted are
subject to DST.

 Transactions Exempt from DST

a. Policies of insurance or annuities made or granted by a fraternal or beneficiary
society, order, association or cooperative company, operated on the lodge system
or local cooperation plan and organized and conducted solely by the members
thereof for the exclusive benefit of each member and not for profit.

b. Certificates of oaths administered to any government official in his official

capacity or of acknowledgment by any government official in the performance of
his official duties, written appearance in any court by any government official, in
his official capacity; certificates of the administration of oaths to any person as to
the authenticity of any paper required to be filed in court by any person or party
thereto, whether the proceedings be civil or criminal; papers and documents filed
in courts by or for the national, provincial, city or municipal governments;
affidavits of poor persons for the purpose of proving poverty; Statements and
other compulsory information required of persons or Corporations by the rules
and regulations of the national, provincial, city or municipal governments
exclusively for statistical purposes and which are wholly for the use of the bureau
or office in which they are filed, and not at the instance or for the use or benefit of
the person filing them; certified copies and other certificates placed upon do
upon documents, instruments and papers for the national, provincial, city or
municipal governments, made at the instance and for the sole use of some other
branch of the national, provincial, city or municipal governments and certificates
of the assessed value of lands, not exceeding Two hundred pesos (₱200) in
value assessed, furnished by the provincial, city or municipal Treasurer to
applicants for registration of title to land.

c. Borrowing and lending of securities executed under the Securities Borrowing

and Lending Program of a registered exchange or accordance with regulations
prescribed by the appropriate regulatory authority: Provided, however, That any
borrowing or lending of securities agreement as contemplated hereof shall be duly
covered be master securities borrowing and lending agreement acceptable to the
appropriate regulatory authority, and which agreement is duly registered and
approved by the Bureau of Internal Revenue (BIR).

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d. Loan agreements or promissory notes, the aggregate of which does not

exceed Two hundred fifty thousand pesos (₱250,000), or any such amount as
may be determined by the Secretary of Finance, executed by an individual for his
purchase on installment for his personal use or that of his family and not for
business or resale, barter or hire of a house, lot, motor vehicle, appliance or
furniture: Provided, however, That he amount to be set by the Secretary of Finance
shall be in accordance with a relevant price index but not to exceed ten percent
(10%) of the current amount and shall remain in force at least for three (3) years.

e. Sale, barter or exchange of shares of stock listed and traded through the local
stock exchange.

f. Assignment or transfer of any mortgage, lease or policy of insurance, or the

renewal or continuance of any agreement, contract, charter, or any evidence of
obligation or indebtedness, if there is no change in the maturity date or remaining
period of coverage from that of the original instrument.

g. Fixed income and other securities traded in the secondary market or through an
exchange.

h. Derivatives, repurchase agreements and reverse repurchase agreements shall

be treated similarly as derivatives

Derivatives exempted from DST shall refer only to those derivatives issued by
entities duly licensed by the BSP to issue and trade in derivatives, and whose
issuance is duly authorized by the BSP.

i. Interbranch or interdepartmental advances within the same legal entity.

j. All forbearance arising from sales or service contracts including credit card
and trade receivables: Provided, that the exemption be limited to those executed
by the seller ort service provider itself.

k. Bank deposit accounts without a fixed term or maturity.

l. All contracts, deeds, documents and transactions related to the conduct of

business of the Bangko Sentral ng Pilipinas.

m. Transfer of property pursuant to Section 40(c)(2) of the Tax Code.

Section 40(C2) of the Tax Code refers to exempt transfers of real property in
exchange for shares of stock resulting in control. Note, however, that the issuance
of shares in exchange for such real property is subject to the DST on original
issuance of shares.

n. Interbank call loans with maturity of not more than seven (7) days to cover
deficiency in reserves against deposit liabilities, including those between or among
banks and quasi-banks.

The purpose of the loan must be strictly to cover the deficiency in reserves against
deposit liabilities for the exemption to apply. If the purpose is otherwise, the same
shall be subject to the DST on debt instruments

 Electronic Documents
Electronic documents are likewise subject to the DST where no exemption, as mentioned
above, applies. Note that under the Electronic Commerce Act, electronic documents are
the functional equivalent of a written document under existing laws and the issuance
thereof is tantamount to the issuance of a written document and therefor subject to DST.

 Single Continuous Transaction

Single continuous transaction refers to transactions consisting of a single act and a single
purpose but which may have as its component more than one taxable transaction, if taken
separately.

 Loan Transactions with Security

Note that Section 179 of the Tax de provide that only one DST shall be imposed on either
loan agreement or promissory note issued to secure such loan, whichever is higher.
Sec. 8 of RR No. 9-1994 provides that where only one instrument was prepared, made,
signed and executed to cover a loan agreement/promissory note, pledge/mortgage, the

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DST shall be paid and computed in the full amount of the loan or credit granted. In this
regard, the instrument shall be treated as covering only one taxable transaction, subject to
the higher DST.

 Repurchase Agreement
A repurchase agreement is where the seller would sell securities with an agreement that
he would purchase back the security at a fixed price on a fixed future date. Note that this
transaction is considered exempt from DST, since it is really a form of financing and not an
actual sale of securities.
However, the BIR has deemed the transaction as consisting of two components, the
repurchase agreement itself and a pledge. Accordingly, the BIR deems the pledge not
covered by the exemption and therefor subject to DST.

 Letter of Credit
A letter of credit (LC) is a contract by and between a Local Bank and its Correspondent
Bank in a foreign country. The LC is opened by the Local Bank in favor of a Client/Importer
who has a credit line;
through the LC, the Local Bank orders its Correspondent Bank to pay the Supplier of
Goods in the foreign country, upon presentation of proof that the goods have been laden
on board a vessel or an aircraft, and the title over the goods s legally transferred to the
Local Bank, pursuant to the shipping agreement. After which, the Client/Importer would
issue a Trust Receipt as security for the payment of the amount advanced by the Bank.
However, in RMC No. 51-2010, the BIR imposed a separate DST on the trust receipt.

 Mode of Payment and/or Remittance of DST

In general, the DST return shall be filed five (5) days after the close of the month when
the taxable document was made, signed, issued, accepted or transferred and the tax
thereon shall be paid at the same time the return is filed.
Tax Forms
BIR Form 2000 Monthly Documentary Stamp Tax Declaration/Return;
BIR Form 2000-OT Documentary Stamp Tax Declaration/Return (One-Time Transactions)

Where:
Authorized Agent Banks within the territorial jurisdiction of the RDO over the residence or
principal place of business of the taxpayer.
Exception:
The tax may be paid either through:
1. Purchase and actual affixture, or
2. By imprinting the stamps through a DST metering machine.
Documentary Requirements
Mandatory
1. Photocopy of the document to which the documentary stamp shall be affixed
2. Proof of exemption under special laws, if applicable;
3. Proof of payment of documentary stamp tax paid upon the original issue of the
stock, if applicable.
Online Electronic DST Imprinting Machine
Unless expressly exempted by the Commissioner on meritorious grounds, the following
class of taxpayers shall use the "on-line electronic DST imprinting machine" in the
payment and remittance of their documentary stamp taxes:
1. Bank, a quasi-bank or a non-bank financial intermediary, a finance Company, or
an insurance, a surety, a fidelity, or annuity company;
2. Shipping and airline companies;
3. Pre-need company on sale of pre-need plans
4. Educational institution in respect of issuance of taxable certificates (e.g.,
Diploma, Transcript of Records, and other documents taxable as certificates)
5. Such other industries as may be required by the Commissioner to use the "on-
line electronic DST imprinting machine"

For eDST System User

Prior to the enrollment in the eDST System, taxpayers availing thereof, whether on the
mandatory or optional basis, shall be duly enrolled under the BIR Electronic Filing and
Payment System (eFPS). In paying the DST liabilities, BIR Form No. 2000 shall be filed
and the amount due thereon shall be paid thru the eFPS for taxpayers and PhilPass
Facility of the Bangko Sentral ng Pilipinas for banks (AABs and non-AABs).

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 Effect of Failure to Stamp Taxable Document

An instrument, document or paper which is required by law to be stamped and which has
been signed, issued, accepted or transferred without being duly stamped:
1. Shall not be recorded
2. Nor shall it or any copy thereof or any record of transfer of the same be admitted
or used in evidence in any court
3. No notary public or other officer authorized to administer oaths shall add his jurat
or acknowledgment to any document subject to DST unless the proper
documentary stamps are affixed thereto and cancelled.

 Accounting for Documentary Stamp Tax

Illustration
JKL Company sold a real property for consideration amounting to ₱5,800,000. The deed
of sale in this transaction is a taxable document. JKL should file and pay documentary
stamp tax amounting to ______.

Taxable Unit Tax Due P/Unit Tax Due

First ₱1,000 ₱1,000 ₱15 ₱15
Excess ₱1,000 ₱5,799,000/1,000 ₱5,799 ₱15 ₱86,985
Total ₱87,000

Or
₱5,800,000 @1.5% = ₱87,000

Upon filing and payment of the DST, JKL Company would record the transaction in its
books as:

Account Titles Debit Credit

Documentary Stamp Tax 87,000
Cash 87,000

REVIEW QUESTIONS
1. What is Documentary Stamp Tax?

2. Who shall file and pay the Documentary Stamp Tax?

3. What are the BIR Forms you need to file in Documentary Stamp Tax?

4. What are the implications of failure to stamp taxable documents?

5. Is DST Law applicable on Electronic Documents?

6. When and Where to File and Pay Documentary Stamp Tax?

7. What are the attachments in Documentary Stamp Tax?