Imposition and Computation of Documentary Stamp Tax on a Deed of Assignment

July 8, 1991 BIR RULING NO. 130-91 28 (b) 074-91 128-91 S i r : This refers to your letter dated May 20, 1991 requesting a ruling on your client's liability to the documentary stamp tax on a Deed of Assignment executed on March 13, 1991 by and between Jose Yu Ping Kun, an assignor, and Emerald Green Properties and Development Corporation as assignee, of real properties with a total valuation of P315,750.00, in partial settlement of the subscription of Jose Yu Ping Kun, Cecilia L. Yu, Dionisio L. Yu, Gerardo L. Yu, Timoteo L. Yu, Leonardo L. Yu, Angelo L. Yu and Paulino L. Yu in the capital stock of the assignee corporation. cdta In reply, please be informed as follows: 1. Pursuant to Section 175 of the Tax Code as amended, a Deed of Assignment is subject to documentary stamp tax imposed under Section 196 of the Tax Code, as of the time the act is done or transaction had. (BIR Ruling No. 229-90) In other words, the documentary stamp should be affixed to the document, e.g., deed of assignment, at the time of the execution or signing of the document by the parties thereto. (RMC No. 45-88 dated September 7, 1988). The fact that the articles of Incorporation was later on disapproved by the Securities & Exchange Commission will not give rise to the refund of the documentary stamp tax already paid because upon execution of the document of conveyance the taxable transaction is closed and completed. 2. Pursuant to Section 175 of the Tax Code stating "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 seventy centavo on each two hundred pesos, or fractional part thereof, of the par value of such certificates . . ." payment of the documentary stamp tax on the original issue of the certificate of stock is due upon the issuance of the certificate. 3. Under Section 16 (e) of the Tax Code stating that for purposes of computing any internal revenue tax, the value of the property shall be whichever is higher of the fair market value as determined by the Commissioner, or the fair market value as shown in the schedule of values of the Provincial and City Assessors. In the absence of the prescribed zonal value or any evidence of higher valuation, the fair market value appearing in the current Tax Declaration issued by the Assessor's Office as upgraded by applicable issuances i.e., RMO No. 10-86, RMO No. 10-86A, Revenue Audit Memorandum Nos. 3-86 and 3-86A is used as basis in computing the documentary stamp tax on the document. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner