Exemption from the Payment of Documentary Stamp Tax on Certificates of Stock

May 13, 1980 BIR RULING NO. 052-80 Philex Employees Cooperative Credit Union c/o Philex Mining Corporation P.O. Box 46, Baguio City Attention: Mr . Andy Liban Manager Gentlemen : This refers to your letter dated November 4, 1978 to the Ministry of Local Government and Community Development requesting exemption from the payment of documentary stamp tax on certificates of stock issued to the members of your cooperative, resulting from the conversion of your member's Fixed Deposit into shares of stock at P10.00 per share. It appears also that the old shares of stock certificates of your Namawi Consumer's Cooperative, Inc. will be replaced with new ones. cdti In reply thereto, I have the honor to inform you as follows: Presidential Decree No. 175 which had repealed all existing cooperative laws, exempts cooperatives only from the payment of income taxes and sales taxes. Accordingly, the original issues of your certificates of stock to your members are subject to documentary stamp tax pursuant to Section 224 of the Tax Code as amended by Presidential Decree No. 1457 which provides that "Sec. 224. Stamp tax on original issue of certificates of stock . On every original issue, whether on organization, reorganization or for any lawful purpose, of certificates of stock by any association, company, or corporation, there shall be collected a documentary stamp tax of one peso and ten centavos on each two hundred pesos, or fractional part thereof, of the par value of such certificates: Provided , That in the case of the original issue of stock without par value the amount of the documentary stamp tax herein prescribed shall be based upon the actual consideration received by the association, company, or corporation for the issuance of such stock, and in the case of stock dividends on the actual value represented by each share." However, as regards to your second inquiry, no documentary stamp tax is due on certificates of stock which are issued to Namawi Consumers' Cooperative, Inc. to replace prior or original certificates of stock, provided the replacement certificates are issued to the same person and the tax has been paid on the original issue, inasmuch as the issuance of these replacement certificates is not an original issue either on organization or reorganization. (Sec. 13, Regulation No. 26, Department of Finance). cdt Very truly yours, EFREN I. PLANA Acting Commissioner