BIR Ruling

October 11, 1972 3rd Indorsement Respectfully returned to the Honorable, the Secretary of Finance, Manila, the within papers relative to the request of the Chairman, Private Education Assistance Committee for a ruling as to whether the Fund for Assistance to Private Education is exempt from the payment of the 2% (now %) stock transaction tax on its sale of securities purchased and stock dividends declared after November 4, 1970, the date of effectivity of Republic Act No. 6141. aisadc The basis of the request for exemption is that the Fund for Assistance to Private Education created by Executive Order No. 156 is allegedly owned by the Government and as such is exempt from taxation. Section 195-B of the Tax Code, as inserted by Republic Act' No. 6141 provides as follows: "Sec. 195-B. Percentage tax on stock transactions . There shall be levied, assessed, collected, and paid on every sale, exchange, transfer or similar transaction intended to convey ownership of, or title to, any share or shares of stock, a tax equivalent to two per centum of the gross selling price of the share or shares of stock, exchanged or transferred, which shall be paid by the seller or transferor. "The tax herein imposed shall not apply to: "(1) The issuance by a corporation of shares of stock, whether original or additional issues; "(2) The donation of any share or shares of stock made to any educational or charitable corporation, institution, foundation, trust or philanthropic organization or research institution or organization as defined in and subject to the conditions imposed by Section one hundred ten of this Code; "(3) The exchange of any share or shares of stock effected pursuant to the plan for merger or consolidation under paragraph (2), (b), Section thirty-five of this Code; "(4) The transfer of shares of stock by testate or intestate succession; and "(5) The sale, exchange or transfer of shares acquired before the effectivity of this Act, in which case the pertinent provisions of this Code shall apply." Under the above-quoted provision, the sale of shares of stocks by a tax exempt entity is not one of those transactions to which the tax shall not apply. Accordingly, assuming that the Fund for Assistance to Private Education is tax-exempt, its sale of shares of stock and stock dividends acquired after November 4, 1970 is subject to the 2% (now %) stock transaction tax prescribed in Section 195-B of the Tax Code. cdtech Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue