No-Par Shares of Stock Considered at Face Value for Doc. Stamp Tax Purposes

October 11, 1993 BIR RULING NO. 400-93 NO-PAR SHARES OF STOCK CONSIDERED AT FACE VALUE FOR DOC. STAMP TAX PURPOSES 178 152-90 400-93 Tan & Venturanza 3rd Floor, Alcco Bldg. Ortigas Ave., Greenhills San Juan, Metro Manila Attention: Atty . Ma . Gracia P . Tan This refers to your letter dated July 28, 1993 stating that your client, Tagaytay Highlands International Golf Club, Inc. (Club) is an exclusive club and is organized on a non-profit basis for the sole benefit of its members; that ownership of a share shall entitle the registered owner to the use of all the sports and other facilities of the Club, such rights may be transferred to a representative only after approval by the Board of Directors of the Club; that no profit shall inure to the exclusive benefit of any of its shareholders, hence no dividends shall be declared in their favor; that the shareholders shall be entitled to a pro-rata share of the assets of the Club at the time of its dissolution or liquidation; that the authorized capital stock of the Club is 3,000 shares, all of which are without par value, and shall be issued for such consideration as may be fixed from time to time by the Board of Directors; that the initial issue price of its shares was fixed at P200,000.00 per share; and that in accordance with pricing schedule approved by the SEC, the shares are priced at increasing amounts over a period of time. In connection therewith, you now request for a ruling to the effect that the original issuance of the shares of stock, as well as the transfer, assignment or subsequent disposition thereof are subject to the documentary stamp tax, provided in Section 178 of the Tax Code, as amended; and that since the taxpayer's shares of stock are no-par shares but are issued for such values as may be determined by the Board of Directors from time to time, the documentary stamp tax shall be based on the issue value of the certificate instead of the face value thereof. In reply thereto, I have the honor to inform you that since the Membership Certificate in this case, indicates that the shareholders shall be entitled to a pro-rata share of the assets of the club at the time of its dissolution or liquidation, the same is considered a certificate showing interest in the property of a corporation. Accordingly, the issuance of said certificate as well as the transfer, assignment or subsequent disposition thereof are subject to a documentary stamp tax of P0.20 on each P200.00 or fractional part thereof of the face value of such certificate, pursuant to Section 178 of the Tax Code, as amended. However, inasmuch as the taxpayer's shares of stock are no-par shares, the issue value shall be considered as the face value subject to the documentary stamp tax. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue