Special InTAX: January 2022 Issue 1 | Volume 6

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 6-2022, to provide clarification on the Documentary Stamp Tax (DST) imposed under Section 175 of the 1997 Tax Code, as amended, on Transfer of Shares of Stocks.

Section 175 of the 1997 Tax Code, as amended, pertains to the imposition of DST on sales, agreements to sell, memoranda of sales, deliveries or transfer of shares of stocks.

Thus, the following transfers of shares of stock shall also be subject to DST:

1.   Transfer pursuant to a Deed of Donation;

2.   Transfer pursuant to a Will of the Decedent as approved by the probate court in a Judicial Settlement of Estate; and,

3.   Generally, transfer of shares of stock from the decedent's estate to the heirs thru intestate succession (without a Will) is not subject to DST under Section 175 of the 1997 Tax Code, as amended, as ownership of such shares is transferred to the heirs via succession by operation of law. However, in case of Judicial Settlement of Estate as approved by the probate court or an Extra-Judicial Settlement of Estate (both without a Will), the heir/s specifically waive/s or renounce/s his or her share over the inheritance (i.e., shares of stocks left by the decedent), then, in such a situation, the renounced/ waived shares of stock to be transferred to another heir/s shall also be subject to DST. ln this case, the rules set forth in RMC No. 91-2021 apply.

Attached is the full text of the issuance.

Revenue Memorandum Order No. 6-2022