DST & OPT

Atty. Kim M. Aranas, CPA, CAT

USC-SLG
Cebu City
Coverage
• Purpose and Nature
• Tax Rate and Tax Base
• Exemptions
• Return and Payment of DST
• Effects of Failure to Affix Documentary Stamp
• Jurisprudence
 DOCUMENTARY STAMP TAX
Purpose:
• The untaxed document will not be recorded,
nor will it or any copy thereof or any record of
transfer of the same be admitted or used in
evidence in court until the requisite stamp or
stamps have been affixed thereto and cancelled
• No notary public or other officer authorized to
administer oaths will add his jurat or
acknowledgment to any document subject to
Documentary Stamp Tax unless the proper
documentary stamps are affixed thereto and
cancelled.
 DOCUMENTARY STAMP TAX
Nature:
In general, documentary stamp taxes are levied on the exercise by
persons of certain privileges conferred by law for the creation,
revision, or termination of specific legal relationships through the
execution of specific instruments. Examples of such privileges, the
exercise of which, as effected through the issuance of particular
documents, are subject to the payment of documentary stamp taxes
are leases of lands, mortgages, pledges and trusts, and conveyances
of real property. (Philippine Home Assurance Corporation v. Court of Appeals)
 Who are required to file Documentary Stamp
Tax Declaration Return?
a) In case of constructive affixture of documentary stamps, by the persons making,
signing, issuing, accepting or transferring documents, instruments, loan agreements
and papers, acceptances, assignments, sales and conveyances of the obligation, right or
property incident thereto wherever the document is made, signed, issued, accepted or
transferred when the obligation or right arises from Philippine sources or the property is
situated in the Philippines at the same time such act is done or transaction had;
b) By using the web-based Electronic Documentary Stamp Tax (eDST) System in the
payment/remittance of its/his/her DST liabilities and the affixture of the prescribed
documentary stamp on taxable documents; and
c) By Revenue Collection Agent, for remittance of sold loose documentary stamps.
 Philacor Credit Corporation vs. Commissioner of Internal Revenue,
G.R. No. 169899. February 6, 2013
Under Section 173 of the National Internal Revenue Code, the persons primarily liable for the payment of
DST are the persons (1) making; (2) signing; (3) issuing; (4) accepting; or (5) transferring the taxable
documents, instruments or papers. Should these parties be exempted from paying tax, the other party
who is not exempt would then be liable. In this case, petitioner Philacor is engaged in the business of retail
financing. Through retail financing, a prospective buyer of home appliance may purchase an appliance on
installment by executing a unilateral promissory note in favor of the appliance dealer, and the same
promissory note is assigned by the appliance dealer to Philacor. Thus, under this arrangement, Philacor did
not make, sign, issue, accept or transfer the promissory notes. It is the buyer of the appliances who made,
signed and issued the documents subject to tax while it is the appliance dealer who transferred these
documents to Philacor which likewise indisputably received or “accepted” them. Acceptance, however, is
an act that is not even applicable to promissory notes, but only to bills of exchange. Under the
Negotiable Instruments Law, the act of acceptance refers solely to bills of exchange. In a ruling adopted by
the Bureau of Internal Revenue as early as 1995, “acceptance” has been defined as having reference to
incoming foreign bills of exchange which are accepted in the Philippines by the drawees thereof, and not
as referring to the common usage of the word as in receiving. Thus, a party to a taxable transaction who
“accepts” any documents or instruments in the plain and ordinary meaning does not become primarily
liable for the tax.
 Where DST Return is filed?
Authorized Agent Bank (AAB) within the territorial jurisdiction of the RDO
which has jurisdiction over the residence or principal place of business of the
taxpayer or where the property is located in case of sale of real property or
where the Collection Agent is assigned.
In places where there is no Authorized Agent Bank:
 Revenue Collection Officer or
 Duly authorized City or Municipal Treasurer
 DST RATES
Tax Code Document Taxable Unit Tax Due Taxable Base
Section Per Unit
174 Original Issue of Shares of P200.00 or 1.00 Par value of shares
Stock with par value fraction thereof of stocks

Original Issue of Shares of P200.00 or 1.00 Actual consideration

Stock without par value fraction thereof for the issuance of
shares of stocks

Stock Dividend P200.00 or 1.00 Actual value

fraction thereof represented by each
share
176 Bonds, Debentures, Certificate P200.00 or .75 Par value of such bonds,
of Stock or Indebtedness fraction thereof debentures, Certificate of
issued in foreign Countries Stock or Indebtedness

177 Certificate of Profits or Interest P200.00 or .50 Face value of such

in Property or Accumulation fraction thereof certificate / memorandum

178 Bank Checks, Drafts, On each 1.50

Certificate of Deposit not Document
bearing interest and other
Instruments
179 All Debt Instruments* P200.00 or 1.00 Issue price of any such
fraction thereof instruments
180 All Bills of Exchange or Drafts P200.00 or .30 Face value of any such bill
fraction thereof of exchange or draft
“Debt Instrument” shall mean instruments representing borrowing and lending
transaction including but not limited to:
 debentures,
 certificates of indebtedness,
 due bills,
 bonds,
 loan agreements, including those signed abroad wherein the object of the contract is located or
used in the Philippines,
 instruments and securities issued by the government or any of its instrumentalities
 deposit substitute debt instruments,
 certificates or other evidences of deposits that are drawing instrument significantly higher than
the regular savings deposit taking into consideration the size of the deposit and the risks involved,
 certificates or other evidences of deposits that are drawing interest and having a specific maturity
date,
 promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.
181 Acceptance of Bills of Exchange P200.00 or fraction thereof .30 Face value of such bill of exchange or
or order for the payment of order or the Philippine equivalent of
money purporting to be drawn in such value, if expressed in foreign
a foreign country but payable in currency
the Philippines
182 Foreign Bills of Exchange and P200.00 or fraction thereof .30 Face value of such bill of exchange or
Letters of Credit letter of credit or the Philippine
equivalent of such value, if expressed in
foreign currency
183 Life Insurance Policies If the amount of insurance does not exceed exempt Amount of Insurance
P100,000.00

Exceeds P100,000.00 but does not exceed 10.00 Amount of Insurance

P300,000.00

Exceeds P300,000.00 but does not exceed 25.00 Amount of Insurance

P500,000.00

Exceeds P500,000.00 but does not exceed 50.00 Amount of Insurance

P750,000.00

Exceeds P750,000.00 but does not exceed 75.00 Amount of Insurance

P1,000,000.00

Exceeds P1,000,000.00 100.00 Amount of Insurance

184 Policies Of Insurance upon Property P4.00 premium or .50 Premium charged
fraction thereof
185 Fidelity Bonds and other Insurance Policies P4.00 premium or .50 Premium charged
fraction thereof

186 Policies of Annuities or other instruments P200.00 or fraction .50 Premium or

thereof installment payment
or contract price
collected

Pre-Need Plans P200.00 or fraction .20 Premium or

thereof contribution collected
187 Indemnity Bonds P4.00 or fraction .30 Premium charged
thereof

188 Certificates of Damage or otherwise and Certificate or Each Certificate 15.00

document issued by any customs officers, marine
surveyor, notary public and certificate required by
law or by rules and regulations of a public office
189 Warehouse Receipts (except if Each Receipt 15.00
value does not exceed P200.00)
190 Jai-alai, Horse Race Tickets, lotto P1.00 cost of ticket .10 Cost of the ticket
or Other Authorized
Number Games Additional P0.10 on every P1.00 or fraction Cost of the ticket
thereof if cost of ticket exceeds P1.00
191 Bills of Lading or If the value of such goods exceeds P100.00 1.00 Value of such goods
Receipts(except charter party) and does not exceed P1,000.00

If the value exceeds P1,000.00 10.00 Value of such

goods
Freight tickets covering goods, merchandise Exempt
or effects carried as accompanied baggage
of passengers on land and water carriers
primarily engaged in the transportation of
passengers
192 Proxies(except proxies issued Each proxy 15.00
affecting the affairs of
associations or corporations,
organized for religious,
charitable or literary purposes)
193 Powers of Attorney(except acts Each Document 5.00
connected with the collection of
claims due from or accruing to the
Government of the Republic of the
Philippines, or the government of any
province, city or Municipality)
194 Lease and other Hiring agreements or First 2,000 or fractional part thereof 3.00
memorandum or contract for hire,
use or rent of any land or tenements For every P1,000 or fractional part 1.00
or portions thereof thereof in excess of the first P2,000 for
each year of the term of the said
contract or agreement
195 Mortgages Pledges of lands, estate, or First 5,000 20.00 Amount Secured
property and Deeds of Trust
On each P5,000 or fractional part 10.00 Amount Secured
thereof in excess of 5,000
196 Deed of Sale, instrument or writing First 1,000 15.00 Consideration or Fair Market Value,
and Conveyances of Real Property whichever is higher (if government is
(except grants, patents or original a party, basis shall be the
certificate of the government) consideration)

For each additional P1,000 or fractional 15.00 Consideration or Fair Market Value,
part thereof in excess of P1,000 whichever is higher (if government is
a party, basis shall be the
consideration)
 M.J. Lhuillier Pawnshop v. CIR, G.R. No. 166786, May 3, 2006
• The onus of proving that pawnshops are not subject to DST is thus shifted to petitioner. In
establishing tax exemptions, it should be borne in mind that taxation is the rule, exemption is the
exception. Accordingly, statutes granting tax exemptions must be construed in strictissimi juris
against the taxpayer and liberally in favor of the taxing authority. One who claims an exemption
from tax payments rests the burden of justifying the exemption by words too plain to be mistaken
and too categorical to be misinterpreted.

• In the instant case, there is no law specifically and expressly exempting pledges
entered into by pawnshops from the payment of DST. Section 199 of the NIRC
enumerated certain documents which are not subject to stamp tax; but a pawnshop
ticket is not one of them. Hence, petitioners nebulous claim that it is not subject to DST
is without merit. It cannot be over-emphasized that tax exemption represents a loss of
revenue to the government and must, therefore, not rest on vague inference. Exemption
from taxation is never presumed. For tax exemption to be recognized, the grant must be
clear and express; it cannot be made to rest on doubtful implications.
197 Charter parties and 1,000 tons and P500.00 for the first 6 months Registered gross
Similar Instruments below Plus P50 each month or fraction tonnage
thereof in excess of 6 months

1,001 to 10,000 P1,000 for the first 6 months Plus Registered gross
tons P100 each month or fraction tonnage
thereof in excess of 6 months

Over 10,000 P1,500 for the first 6 months Plus Registered gross
tons P150 each month or fraction tonnage
thereof in excess of 6 months

198 Stamp Tax on At the same rate as that imposed

Assignments and on the original instrument.
Renewals or Continuance
of Certain Instruments
Exempt papers/documents from DST:
• Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or
cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely
by the members thereof for the exclusive benefit of each member and not for profit
• Certificates of oaths administered by any government official in his official capacity or acknowledgement by any
government official in performance of his official duty
• Written appearance in any court by any government official in his official capacity
• Certificates of the administration of oaths to any person as to the authenticity of any paper required to be filed
in court by any person or party thereto, whether the proceedings be civil or criminal
• Papers and documents filed in court by or for the national, provincial, city or municipal governments
• Affidavits of poor persons for the purpose of proving poverty
• Statements and other compulsory information required of persons or corporations by the rules and regulations
of the national, provincial, city or municipal government exclusively for statistical purposes and which are wholly for
the use of the Bureau or office in which they are filed, and not at the instance or for the use or benefit of the person
filing them
• Certified copies and other certificates placed upon documents, instruments and papers for the national,
provincial, city or municipal governments made at the instance and for the sole use of some other branch of the
national, provincial, city or municipal governments
• Certificates of the assessed value of lands, not exceeding P200 in value assessed, furnished by the provincial, city
or municipal Treasurer to applicants for registration of title to land
Exempt papers/documents from DST:
• Borrowing and lending of securities executed under the Securities Borrowing and Lending Program of a registered exchange, or
in accordance with regulations prescribed by the appropriate regulatory authority
• Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos (P250,000),
or any such amount as may be determined by the Secretary of Finance, executed by an individual for his purchase on installment
for his personal use or that of his family and not for business or resale, barter or hire of a house, lot, motor vehicle, appliance or
furniture:
• Sale, barter or exchange of shares of stock listed and traded through the local stock exchange (R.A 9648)
• Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any agreement, contract,
charter, or any evidence of obligation or indebtedness, if there is no change in the maturity date or remaining period of coverage
from that of the original instrument.
• Fixed income and other securities traded in the secondary market or through an exchange.
• Derivatives: Provided, That for purposes of this exemption, repurchase agreements and reverse repurchase agreements shall be
treated similarly as derivatives
• Interbranch or interdepartmental advances within the same legal entity
• All forebearances arising from sales or service contracts including credit card and trade receivables: Provided, That the
exemption be limited to those executed by the seller or service provider itself.
• Bank deposit accounts without a fixed term or maturity
• All contracts, deeds, documents and transactions related to the conduct of business of the Bangko Sentral ng Pilipinas
• Transfer of property pursuant to Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended
• Interbank call loans with maturity of not more than seven (7) days to cover deficiency in reserves against deposit liabilities,
including those between or among banks and quasi-banks
 What is Electronic Documentary Stamp Tax
(eDST) System? (sec. 5 (1), RR No. 7-2009)

• The eDST is a web-based application created for taxpayers and the BIR that
is capable of affixing a secured documentary stamp on the taxable
documents as defined under the appropriate provisions under Title VII of
the National Internal Revenue Code of 1997, as amended, thru the use of a
computer unit, any laser printer with at least 1200 dpi resolution, and
Internet Explorer 7.0 It is also capable of providing a 3-layer watermark on
stamps for added security.
Is DST Law applicable on Electronic
Documents? (sec. 10, RR No. 13-2004)
• Yes. The DST rates as imposed under the Code, as amended by R.A. 9243
shall be applicable on all documents not otherwise expressly exempted by the
said law, notwithstanding the fact that they are in electronic form. As
provided for by R.A. 8792, otherwise known as the Electronic Commerce
Act, electronic documents are the functional equivalent of a written
document under existing laws, and the issuance thereof is therefore
tantamount to the issuance of a written document, and therefore subject to
DST.
Is any document, transaction or arrangement entered into under
Financial Lease subject to Documentary Stamp Tax? (RMC No. 46-2014)

• Yes. Financial lease is akin to a debt rather than a lease. A nature of an

obligation than a lease of personal property. The mere act of extending
credit is already a means of facilitating an obligation or advancing in behalf
of the lessee certain property in lieu of cash in exchange for a definitive
amortization to be paid to the lessor with profit margin included. Section 179
of the NIRC, as amended, covers all debt instruments. Therefore, being a
nature of an obligation, any document, transaction or arrangement entered
into under financial lease is subject to DST under such Section of the NIRC,
as amended.
 OTHER PERCENTAGE TAX (OPT)
• Percentage Tax on Domestic Carriers and Keepers of Garages
• Percentage Tax on International Carrier
• Franchise Taxes
• Tax on Overseas Communication
• Tax on Banks and Non-bank Financial Intermediaries Performing Quasi-Banking Functions
• Tax on Life Insurance Premiums
• Tax on Agents of Foreign Insurance Companies
• Amusement Taxes
• Tax on Winnings
• Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded Through the Local Stock
Exchange or Through Initial Public Offering
• Return and Payment of Percentage Tax
 Coverage Basis Tax Rate
Persons exempt from VAT under Sec. 116 Gross Sales or Receipts 3%
Domestic carriers and keepers of garages Gross Receipts 3%
International Carriers:
International air/shipping carriers doing business in the Gross Receipts 3%
Philippines
Franchise Grantees:
Electric , gas and water utilities Gross Receipts 2%
Radio and television broadcasting companies whose Gross Receipts 3%
annual gross receipts of the preceding year do not
exceed P 10,000,000 and did not opt to register asVAT
taxpayer
 Coverage Basis Tax Rate
Tax on overseas dispatch, message or conversation Amount paid for the service 10%
originating from the Philippines (Section 120) (paid by the person availing the
service to the person rendering
(by telephone, telegraph, telewriter exchange, wireless
the service)
and other communication services)

Exemptions from Section 120:

1. Government
2. Diplomatic Services
3. International Organizations
4. News Services
 Interest, commissions and discounts from lending
activities as well as income from finance lease on the
basis of remaining maturities of instruments:

 Short term maturity (5 years or less) 5%

 Maturity period is more than 5 years 1%
Banks and non-bank
financing intermediaries  On Dividends and equity shares in net income of 0%
subsidiaries
 On royalties, rentals of properties, real or personal, 7%
profits from exchange and all other items treated as
gross income under Sec. 32 of the Code
 On Net Trading Gains within the taxable year on 7%
foreign currency, debt securities, derivatives and
other similar financial instruments
 On interest, discounts and other items of gross income 5%
paid to finance companies and other financial
intermediaries not performing quasi banking functions
Other non-bank Finance
Interest, commissions and discounts paid from their loan
Intermediaries (Sec. 122)
transactions from finance companies as well as income
from financial leasing shall be taxed based on the
remaining maturities of instruments:
• maturity period is 5 years or less 5%
• maturity period is more than 5 years 1%
Life Insurance Companies (except Total premiums collected 2%
purely cooperative companies or
associations) (Sec 123)
Agents of foreign insurance Total premiums collected Twice as the tax
companies (Sec. 124) (except imposed in Section
reinsurance premium) 123
In all cases, where owners of property Premiums paid 5%
obtain insurance directly with foreign
companies (without use of any
agent)
 AMUSEMENT TAXES
Proprietors, lessee or operator of the following:

Cockpits Gross receipts 18%

Cabarets, Night or Day Clubs Gross receipts 18%
Boxing exhibitions (Except: World or oriental championship is at Gross receipts 10%
stake AND one of the contenders if Filipino citizen promoted by the
Filipino citizen of Philippine Corporation.
Professional basketball games Gross receipts 15%
Jai-alai and race track (operators shall withheld tax on winnings) Gross receipts 30%
irrespective of whether or not ny amount is charged for
admission.
Every stock broker who effected a Gross selling price or gross value in ½ of 1%
sale, barter, exchange or other money of shares of stocks sold, bartered,
disposition of shares of stock listed exchanged or otherwise disposed
and traded through the Local Stock
Exchange (LSE) other than the sale by
a dealer in securities
A corporate issuer/stock broker, GSP or gross value of in money of shares
whether domestic of foreign, engaged of stocks sold, bartered, exchanged or
in the sale, barter, exchange or other otherwise disposed in accordance
disposition through Initial Public with the proportion of stocks sold,
Offering (IPO)/secondary public bartered or exchanged or after listing in
offering of shares of stock in closely the stock exchange
held corporations
• Up to 25 % 4%
• Over 25% but not over 33 1/3% 2%
• Over 33 1/3 % 1%
 Closely Held Corporations (Section 127)

• Any corporation at least 50% in value of the outstanding capital

stock or at least 50% of the total combined voting power of all
classes of stock entitled to vote is owned directly or indirectly by or
for not more than twenty (20) individuals
 When and where to file OPT return?
WHEN: within 25 days after the end of each taxable quarter (except
cancellation of VAT registration—OP tax accrues from the date of
cancellation)
Persons retiring from business subject to business tax must notify the nearest
RDO, file his return and pay the tax within 20 days after closing the business.
NOTE: Commissioner by a revenue regulation may prescribe manner and time
for filing.
WHERE: AAB’s, RDO, or duly authorized treasurer of the city or municipality.
END