MANILA, Philippines - The Bureau of Internal Revenue (BIR) on Wednesday said it will not suspend a ruling slapping a capital gains and documentary stamp tax on shares of listed firms not compliant with the 10 percent minimum public ownership (MPO) rule.
"We find no reason to suspend it. Because in the first place, the SEC has suspended everyone who did not meet the 10 percent public float. You can't trade in the exchange, so you can't be subject to these taxes," BIR commissioner Kim Henares said in a phone interview.
A shareholders group earlier asked the government to stop a new ruling slapping a capital gains and documentary stamp tax on shares of listed firms not compliant with the 10 percent minimum public ownership (MPO) rule.
It also appealed to the Securities and Exchange Commission (SEC) to suspend its blanket denial of applications for the extension of the six months grace period for non-compliant firms.
In its letter addressed to the DOF, SEC and BIR dated 28 December 2012, the Shareholders' Association of the Philippines (SharePHIL) said the implementation of the 10 percent MPO rule for companies is detrimental particularly for minority shareholders.
"The additional tax burden and transaction costs due to additional documentary requirements would have biggest impact on the minority shareholders. They do not have the economies of scale, as do larger or majority shareholders to reduce the costs associated with a transaction on a per share or peso basis," SharePHIL said.
The BIR imposes a capital gains tax and a documentary stamp tax (DST) on every sale, barter, exchange or other disposition of listed companies that are not compliant.
The Philippine Stock Exchange (PSE) has suspended trade of non-compliant listed companies for a period of not more than six months or until June 30, 2013. These firms are Alphaland Corp., Southeast Asia Cement Holdings, Inc., PAL Holdings Inc., Allied Banking Corp., San Miguel Brewery, Inc., PNOC Exploration Corp. and San Miguel Properties Inc.
If a listed company remains non-compliant after June 30, it will be delisted from the local bourse.
SharePHIL, launched in July last year, aims to be a major player in promoting domestic capital market development through advocacy, education and enlightenment of shareholders. It stressed though that it is committed to the government's goal of raising revenues and the policy to encourage greater public ownership in corporations, however, this is best done minus a costly investment environment.