Corporate Stock Documentary Stamp Tax (DST) Program

February 10, 1998 REVENUE MEMORANDUM ORDER NO. 08-98 SUBJECT : Corporate Stock Documentary Stamp Tax (DST) Program TO : All Internal Revenue Officers and Others Concerned I. RATIONALE Relative to the imposition of Documentary Stamp Tax on issuances of shares of stocks: 1. It has been observed that most corporations limit payment of documentary stamp taxes to certificates issued on paid-up capital stocks; 2. The Supreme Court ruled that the documentary stamp tax on original issues of certificates of stock attaches upon acceptance of the stockholder's subscription in the capital stock of a corporation regardless of the physical issuance and delivery to the stockholder of the certificate of stock evidencing his stockholding as enunciated by the Supreme Court in the case of the Commissioner of Internal Revenue vs. Construction Resources of Asia, Inc.; 3. Revenue Memorandum Circular No. 47-97 clarified that what is being taxed is the privilege of issuing shares of stock, and, therefore, the taxes accrue at the time the shares are issued. Further, issuance means the point at which the stockholder acquires and may exercise attributes of ownership over the stocks; and 4. Republic Act No. 8424 otherwise known as the "Tax Reform Act of 1997" further clarifies that the DST on original issues of shares of stock shall attach, upon acceptance by the corporation of the stockholder's subscription, regardless of the actual delivery of the certificates of stock pursuant to Section 175 of the Tax Code, as amended. cdt II. OBJECTIVES This Order seeks to: 1. Maximize collection of DST from all registered corporations relative to their issuances of shares of stocks, taking into consideration the above-mentioned clarifications; 2. Conduct a survey of active registered corporations vis-a-vis those registered with this Bureau and the Securities and Exchange Commission (SEC); and 3. Establish a database for monitoring original issues of corporate stock, as well as subsequent transfers of shares of stocks and the corresponding DST payments. III. POLICIES AND GUIDELINES 1. All existing corporations shall file the Corporate Stock DST Declaration (see Annex A), and the DST Return (BIR Form No. 2000), if applicable when DST is still due on the subscribed share issued by the corporation, on or before the tenth day of the month following publication of this Order. 2. All new corporations shall file the Corporate Stock DST Declaration (see Annex B), together with the DST Return (BIR Form No. 2000), on or before the tenth day of the month following the date of registration with the Securities and Exchange Commission. 3. All existing corporations with authorization for increased capital stock shall file their Corporate Stock DST Declaration (see Annex C), together with the DST Return (BIR Form No. 2000), if applicable when DST is due on subscriptions made after the authorization, on or before the tenth day of the month following the date of authorization. 4. DST shall be paid upon filing of the DST Return (BIR Form No. 2000) with any authorized Accredited Agent Bank (AAB) in the RDO where the corporation is registered or registrable. In RDOs where there are no AABs, payment shall be made with the collection agent or duly authorized Treasurer of the city or municipality where the principal place of business is located. 5. For facility of audit or verification, the Stock and Transfer Book of the corporation must contain information on DST payments. IV. PROCEDURES 1. For the Taxpayer: 1.1 The corporation shall accomplish the DST Return (BIR Form No. 2000), together with the prescribed Annexes, in triplicate. 1.2 The corporation shall file the Return and pay the corresponding DST with the AAB or the Collection Agent/City/Municipal Treasurer at designated dates prescribed above. All existing corporations that have already fully paid their DST on issuances of subscribed shares of stock must file their Corporate Stock DST Declaration (Annex A), together with photocopies of the duly-received DST Return (BIR Form No . 2000) and other evidences of payment, with the Revenue District Office where the corporation is registered . 1.3 The Corporate Secretary shall update accordingly the Stock and Transfer Book of the corporation, by recording all DST payments made for all shares subscribed or paid for. 2. For the Revenue Districts: The Revenue District Officers shall make available sufficient copies of BIR Form No. 2000 and the Annexes herein prescribed to the AABs and the requesting taxpayers. The procedures on the receipt, transmittal and processing of tax returns filed thru the AABs as well as the processing and submission of Batch Control Sheets (BCS) shall be as prescribed under RMO No. 29-91, RMO No. 16-92 and RMO No. 61-94. In case of Computerized Revenue Districts, the procedures provided in the Operations Manual relative to the Registration System (REG), the Collection and Bank Reconciliation System (CBRS) and the Returns Processing System (RPS) shall govern. In addition, the following procedures shall be observed: 2.1 For Non-Computerized Districts: 2.1.1 The Revenue District Office shall segregate the returns filed under the Corporate DST Program under this Order from the regular returns, upon retrieval of the returns from AABs. 2.1.2 Number the returns filed under this Order consecutively as follows: Ex.: RDO No. 20, Balanga, Bataan DST-020-000001-97 DST-020-000002-97 DST-020-000003-97 2.1.3 Prepare a DST collection report under this Order making sure that the taxes collected are included in the Form 12.09 report of the RDO. 2.1.4 Transmit the returns and the DST collection report to the Revenue Region covering the Revenue District. 2.2 For Computerized Revenue Districts: 2.2.1 The Revenue Data Center shall receive from the AAB-HO two (2) copies of the returns together with the attachments for the CBR System and the Returns Processing System (RPS). 2.2.2 Collection and Bank Reconciliation System (CBRS) copy: a. The Document Processing Division of the RDC shall segregate the DST returns from the regular returns during the pre-processing stage; verify data encoded by AABs and forward the returns to the Administrative Division of the RDC. b. The Administrative Division of the RDC shall transmit the DST returns to the RDO concerned for the preparation of DST Collection Reports. The RDOs in the Computerized District Offices shall then transmit the returns to their respective Regional Offices. 2.2.3 Returns Processing System (RPS) copy: a. The Document Processing Division shall segregate the DST returns from the regular returns, encode them, and forward the same to Quality Assurance Division (QAD). b. The QAD shall then prepare the account adjustment form for penalty remission. 3. For the Revenue Regional Offices: 3.1. Gather the returns filed under the corporate DST program and evaluate these returns; 3.2 Prepare and submit a consolidated corporate DST Collection Report and a listing of the corporations and their issuances of shares of stocks to the Assistant Commissioner for Assessment Service; 4. For the Assessment Service: 4.1 The National Assessment Support Task Force (NASTF), under the Assistant Commissioner (Assessment Service), shall monitor the implementation of the corporate DST in the Regional Offices; and 4.2 Consolidate the DST reports of the Regional Offices 4.3 Submit a Monthly Collection Report, together with the corresponding analysis, to the Collection Service, copy furnished the Management Committee (MANCOM). V. PENALTY CLAUSE 1. There shall be imposed, in addition to the DST required to be paid, a surcharge equivalent to twenty-five percent (25%) of the amount due, in the following cases: 1.1 Failure to file the return and pay the tax due thereon on or before the time prescribed by Items 1, 2 and 3 of the Policies and Guidelines of this Order. 1.2 Failure to pay the full amount of tax shown on any return required to be filed under this Order. 2. In case of willful neglect to file the return within the period prescribed by this Order, or in case a false or fraudulent return is willfully made, the penalty to be imposed shall be fifty percent (50%) of the total amount due. 3. In addition to the penalties herein imposed, penal liabilities, as provided by law, shall be imposed upon the responsible corporate officers for each failure by the corporation to file the return, pay the tax, and supply correct and accurate information as mandated by this Order. 4. All other civil and penal liabilities provided by law as are applicable to this Order are hereby adopted. VI. REPEALING CLAUSE All other issuances and/or portions thereof inconsistent herewith are hereby repealed and amended accordingly. VII. EFFECTIVITY This Order shall take effect immediately. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue ANNEX A BIR Form No. 2000-A Corporate Stock Documentary Stamp Tax (DST) Declaration for Existing Corporation ANNEX B BIR Form No. 2000-B Corporate Stock Documentary Stamp Tax (DST) Declaration for New Corporation ANNEX C BIR Form No. 2000-C Corporation Stock Documentary Stamp Tax (DST) Declaration for Existing Corporation on Additional Stock Authorization and New Subscription