IPO stocks, restructured loans now tax-exempt

COURTESY OF PHILIPPINE STOCK EXCHANGE, INC.

Taxpayers don’t have to pay local taxes on stocks sold through an initial public offering (IPO), and documentary stamp tax on extended or restructured loans amid a coronavirus pandemic, according to the Bureau of Internal Revenue (BIR).

BIR Commissioner Caesar R. Dulay on Friday issued the rules that will enforce the tax-exempt provisions of a law that details the government’s economic recovery plan during the pandemic.

The latest exemptions are provided for under separate revenue regulations issued by the tax agency.

Republic Act 11494 or the Bayanihan to Recover As One Act is part of an economic recovery plan that provides relief amid the pandemic, including a 60-day grace period on loans falling due this year.

The documentary stamp tax exemption will cover salary, personal, housing, commercial and motor vehicle loans and amortizations, as well as financial lease, premium and credit card payments. It also covers credit restructuring and micro-lending.

The provision applies to all lenders including banks, quasi-banks, financing and lending companies, real estate developers, life insurers, pre-need firms, companies offering in-house financing for goods and properties, asset and liability management companies and other regulated financial institutions.

The tax exemption could encourage more companies to list on the stock exchange during the pandemic, Maria Lourdes P. Lim, a managing partner at Isla Lipana & Co., PwC Philippines, said in a mobile phone message.

She said the Philippines is the only Asian country that taxes initial public offerings, she pointed out.

Under the BIR rules, interbank loans and bank borrowings are not covered by the tax relief.

The tax agency also released the rules that will implement Bayanihan 2’s provisions on net operating loss of businesses this year, which will be carried over as a deduction from their gross income in the next five years.

The net operating loss for these taxable years may be carried over as a deduction even after Bayanihan 2 expires, these are claimed within the next five consecutive taxable years, it said.

Ms. Lim said this should be complemented with the suspension of the 2% minimum corporate income tax, Ms. Lim said.

“Under the Tax Code, a corporate taxpayer shall pay either the 2% minimum corporate income tax, which is based on gross income, or the 30% income tax based on net taxable income, whichever is higher,” she said.

“So even if the taxpayer is in a net loss position, it will still be liable to pay income tax in the form of the minimum corporate income tax. Unless this is suspended, the carry-over clause may just be a token relief,” she added.

Copies of the circulars were published on Friday and will take effect immediately.

Finance Secretary Carlos G. Dominguez III approved the regulations. — Beatrice M. Laforga





Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>