Listed firms below public float req't face higher taxes

by Warren de Guzman, ANC

Posted at Dec 05 2012 09:12 AM | Updated as of Dec 05 2012 05:40 PM

MANILA, Philippines - Listed companies seeking an extension on the December 31 deadline to meet the minimum public ownership requirement of 10% may escape immediate delisting. 

But buying and selling their shares will be subject to the 6% capital gains tax, not the half percent stock transaction tax.

Securities and Exchange Commission chairwoman Teresita Herbosa says the Bureau of Internal Revenue will make the tax change on January 1, even if the PSE will give companies six months more to actually delist.

"If they don't meet the minimum then the sale of their shares get subject to the full tax but they are not automatically delisted yet. I think they go on a suspended status," she said.

The change will hit investors who have made big gains, capital gains, on their shares including or especially founding families and other controlling shareholders who bought their shares at a fraction of what they're now worth.

So for six months, brokers and investors and the PSE will have 2 tax systems - the stock transaction tax for companies with more than 10% public ownership and the  capital gains tax for those headed for delisting.

Herbosa says this may be complicated. 

"I don't know what kind of status they will have in the meantime, you are paying the full tax and remain listed, your shares will definitely not be subject to the lower stock transaction tax," she said.

Bureau of Internal Revenue commissioner Kim Henares said it won't be difficult, and it's for the stock market's own good. 

"The BIR in what we are doing is really pushing the capital market in being more open in widening their public float. 

As far as we are concerned, what we are doing in being strict is making sure that the capital market in the Philippines will become as robust and the market will be broad as in other markets," Henares said.

Several companies below the float requirement have said they intend to stay listed, including four San Miguel group companies.

Some have opted to delist, including Eton Properties of Lucio Tan.