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Unformatted text preview: REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Page 1 of 20 Quezon City April 22, 2008 REVENUE REGULATIONS NO. 6-2008 SUBJECT : CONSOLIDATED REGULATIONS PRESCRIBING THE RULES ON THE TAXATION OF SALE, BARTER, EXCHANGE OR OTHER DISPOSITION OF SHARES OF STOCK HELD AS CAPITAL ASSETS. TO : ALL INTERNAL REVENUE OFFICERS AND OTHERS CONCERNED. _____________________________________________________________________ SECTION 1. SCOPE. — Pursuant to Section 244, in relation to Sections 24(C), 25(A)(3), 25(B),27(D)(2), 28(A)(7)(c), 28(B)(5)(c), 34(D)(4)(5), 38, 40, and Section 127(A) and (B) of the 1997 National Internal Revenue Code (Tax Code), as amended, these Regulations are hereby promulgated in order to harmonize and consolidate the rules relative to the imposition of tax for the sale, barter, exchange or other disposition of shares of stock of domestic corporation that are listed and traded through the Local Stock Exchange, or disposition of shares through Initial Public Offering (IPO) or disposition of shares not traded through the Local Stock Exchange. SEC.2. DEFINITION OF TERMS. — For purposes of these Regulations, the following definitions of words and phrases are hereby adopted: (a) "Stock Classified As Capital Assets" means all stocks and securities held by taxpayers other than dealers in securities. (b) "Dealer in securities" means a merchant of stocks or securities, whether an individual, partnership or corporation, with an established place of business, regularly engaged in the purchase of securities and the resale thereof to customers; that is one, who as merchant buys securities and re-sells them to customers with a view to the gains and profits that may be derived therefrom. “Dealer in securities” means any person who buys and sells securities for his/her own account in the ordinary course of business (Sec. 3.4, SRC). (c) "Shares of Stock" shall include shares of stock of a corporation; warrants and/or options to purchase shares of stock; as well as units of participation in a partnership (except general professional partnerships), joint stock companies, joint accounts, joint ventures taxable as corporations, associations, and recreation or amusement clubs (such as golf, polo or similar clubs); and mutual fund certificates. Page 2 of 20 (d) "Option" refers to an option to acquire stock or an option to acquire such an option and each one of a series of options to acquire stock. “Options” are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying security at a predetermined price, called the exercise or strike price, on or before a predetermined date, called the expiry date, which can only be extended by the Commission upon stockholders’ approval. (SRC Rule3 (1)(F)(1) (e) "Shareholder" shall include holders of a share/s of stock, warrants and/or options to purchase shares of stock of a corporation, as well as a holder of a unit of participation in a partnership (except general professional partnerships), in a joint stock...
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