Computation of the Amount of DST Payable by the Registered Landowners-Assignors

August 25, 1988 BIR RULING NO. 412-88 196 259-88 412-88 S i r : This refers to your letter dated August 11, 1988 requesting in behalf of your client, Catalina & Sons, Inc., Dr. A. Santos Avenue, Sucat, Paraaque, Metro Manila a ruling relative to the computation of the amount of documentary stamp tax payable by the registered landowners-assignors on the Deed of Assignment and Exchange executed by them in favor of your said client transferring their three (3) parcels of real properties in exchange for the original issue of 8,000 shares of stocks valued at P800,000.00; and that the Revenue District Officer be informed of whatever resolution this Office may render. It is represented that the Revenue District Officer of Revenue District No. 34 is insisting that the zonal value of the real properties shall be the basis of the documentary stamp tax payable on the said Deed of Assignment & Exchange; and that you are of the opinion that the value of the stocks issued in exchange for the real properties shall be the basis of the documentary stamp tax to be paid. In reply, please be informed that your opinion is hereby confirmed. A conveyance or deed whereby land is assigned or transferred to the purchaser is subject to documentary stamp tax based on the consideration or value received or contracted to be paid for such realty. (Sec. 196, Tax Code) A stock in a Corporation is a valuable consideration for transfer of real property (Section 177, Documentary Stamp Tax Regulation). Accordingly, if parcels of real properties are exchanged with stocks in a corporation, as in this case, the latter (Shares of Stock) is the consideration, the value of which shall be the basis of the documentary stamp tax due on the aforesaid Deed of Assignment and Exchange. (BIR Ruling No. 259-88) Accordingly, the zonal values of the real properties cannot be considered the basis in computing the documentary stamp tax. Since the certificates of shares of stock consisting the consideration are original issues, the documentary stamp tax due thereon shall be based on the par value of such certificates, i.e., P1.75 on each P200.00 or fractional part thereof. (Sec. 175, Tax Code, as amended by Executive Order No. 273). Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner