Payment of Documentary Stamp Taxes

August 3, 1998 Hon. Solomon S. Cua Undersecretary Department of Finance Roxas Boulevard Corner Vito Cruz Street Manila S i r : This refers to your 1st Indorsement letter dated July 20, 1998 requesting for comments and recommendation on the feasibility of the proposals mentioned therein and in the unsigned letter attached to it relative to payment of documentary stamp taxes based on the value of the minimum initial subscribed capital stock upon the filing of an application for incorporation of a new company . Regarding the suggestion requiring the SEC to collect documentary stamp tax on the above situation, we believe this is not legally feasible inasmuch as Section 200 (C) of RA 8424, otherwise known as the Tax Reform Act of 1997 explicitly prescribes where the documentary stamp tax returns shall be filed. Likewise, we believe that the other suggestion requiring the SEC to require proof of payment thereof prior to incorporation is not legally feasible. Section 19 of the Corporation Code expressly provides that a private corporation commences to have a corporate existence and juridical personality only from the date the SEC issues a certificate of incorporation/registration. Thus, prior to incorporation, it would be legally impossible for a proposed corporation to file the required documentary stamp tax returns or secure proof of payment thereof as it still has no legal personality to file the same. Perhaps what the SEC can do is to furnish regularly the Bureau of Internal Revenue (BIR) a list of newly registered corporations. Very truly yours, (SGD.) DANILO L. CONCEPCION Associate Commissioner