Minimum public stocks
THE Bureau of Internal Revenue (BIR) recently issued Revenue Regulations No. 16-2012 to prescribe the tax treatment of sales, barters, exchanges or other dispositions of shares of stock of publicly-listed companies that meet or do not meet the minimum percentage of listed securities held by the public (or public float) of 10 percent issued and outstanding shares, exclusive of any treasury shares or the minimum public ownership as required by the Securities and Exchange Commission (SEC) or Philippine Stock Exchange (PSE), whichever is higher (collectively referred to herein as the MPO).
All publicly-listed companies are required, at all times, to maintain a minimum percentage of listed securities held by the public (or public float) of the higher rate of 10 percent of the publicly-listed companies’ issued and outstanding shares, exclusive of any treasury shares or at such percentage as may be prescribed by the SEC or PSE.
Publicly-listed companies which are non-compliant with the above-mentioned MPO as of Dec. 31, 2011 and those whose public ownership levels subsequently fall below the above-mentioned MPO level at any time prior to Dec. 31, 2012 may be allowed up to Dec. 31, 2012 to comply with the MPO.
The sale, barter, transfer and or assignment of publicly-listed companies that still fail to meet the MPO after the lapse of the grace period shall be subject to final tax at the rate of five percent or 10 percent on the net capital gains and the documentary stamp tax (DST).
MPO RULE
Based on Revenue Regulations No. 16-2012, there shall be levied, assessed and collected on every sale, barter, exchange or other disposition of shares of stock of a publicly-listed company which is non-compliant with the MPO mentioned herein, that is transacted up to Dec. 31, 2012 under the Amended MPO Rule, a stock transaction tax at the rate of one-half of one percent (½ of 1 percent) of the gross selling price or gross value in money of the shares of stock.
Moreover, there shall also be levied, assessed and collected on every sale, barter, exchange or other disposition of shares of stock of a publicly-listed company which is non-compliant with the MPO, a final tax at either five percent or 10 percent on the net capital gains imposed.
The transfers of shares of stocks are subject to Documentary Stamp Tax (DST), upon execution of the deed transferring ownership or rights thereto, or upon delivery, assignment or indorsement of such shares in favor of another. No transfer of shares of stock shall be recorded unless DST thereon has been duly paid for.
no sale deal
No sale, exchange, transfer or similar transaction intended to convey ownership of, or title to any share of stock shall be registered in the books of the corporation unless the receipts of payment of the taxes herein imposed in the instances herein specified and the Certificate Authorizing Registration (CAR) and/or Tax Clearance Certificate (TCL) under pertinent Revenue Regulations and issuances are filed with, and recorded by the stock transfer agent or secretary of the corporation. It shall be the duty of the aforesaid persons to inform the Bureau of Internal Revenue (BIR) any case of non-payment of tax.
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