BIR Ruling [DA-218-04]

April 22, 2004 BIR RULING [DA-218-04] PKS and Sons Corporation No. 415 Arayat St., Mandaluyong City Attention: Ms. Thelma Santos-Hugo Attorney-in-Fact Gentlemen : This refers to your letter dated March 12, 2004 requesting for clarification regarding the time of payment of the documentary stamp tax (DST) on the original issuance of shares of stock in accordance with Revenue Memorandum Ruling (RMR) No. 1-2001. It is represented that PKS and Sons Corporation ("PKS") have secured a certification from this Office under SN-023-2004 dated February 5, 2004 stating, among others that the transfer of the properties in exchange of shares of stocks is not subject to income/capital gains/expanded withholding tax/donor's tax/value-added tax but the transaction is however subject to the documentary stamp taxes (DST) on the transfer of real property and original issuance of shares; that the DST on the transfer of real property due on the Deed of Assignment executed on January 28, 2004 was already paid on February 5, 2004; that you have not paid the DST on the original issuance of shares because your SEC registration is not yet approved and besides, the time of payment of the said DST under RMR 1-2001 shall be within 5 days after the close of the month of the approval of SEC registration and payable at the RDO where the corporation is located which in your case is in Mandaluyong and not in West Makati; that your application for the Certificate Authorizing Registration (CAR) with RDO No. 49, West Makati for the real properties which are subject of the exchange for shares of stock was held pending to date until your payment of DST on the original issuance of shares as demanded by the Revenue District Officer; that you are ready to pay the said tax provided it is already due; and that when you pay the DST prior to the due date and the SEC will not approve your application for registration then you will have a hard time claiming for refund. In reply, please be informed that under Section 5 of Revenue Memorandum Ruling No. 1-2001 which provides, to wit: "5. Time of Payment of Taxes . The time for the payment of the documentary stamp tax liabilities, whether the taxpayer is an e-filer or not, shall be as follows: xxx xxx xxx 5.2 With respect to the original issuance of shares mentioned in 4.2, above, the documentary stamp tax shall be paid on or before the fifth (5th) day after the close of the month of 5.2.1 Approval of SEC registration, in case of original incorporation ; xxx xxx xxx." (Emphasis supplied) It is clear from the aforequoted provision that the time of payment of DST on the original issuance of shares , in case of original incorporation , shall be on or before the fifth (5th) day after the close of the month of approval of SEC registration and not upon filing the application for the issuance of Certificate Authorizing Registration (CAR), with the DST on the conveyance of real property having been paid. This serves as an authority for the Revenue District Officer, Revenue District Office No. 49, West Makati to issue the corresponding CAR pertaining to the application filed by PKS and Sons Corporation. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service