BIR shelves plan to hike tax on block sales through PSE

The Bureau of Internal Revenue has decided to indefinitely suspend the imposition of higher tax on block sales coursed through the Philippine Stock Exchange, after the players in the equities market opposed the move. BIR Assistant Commissioner Nelson Aspe told reporters yesterday that the agency has decided to recall the implementation of the order which was issued earlier this week. “The implementation of the RMC [Revenue Memorandum Circular] has been recalled for further study," Aspe said. Through the memorandum, the BIR sought to impose 5 percent to 10 percent tax on block sales, to replace the current stock transaction tax of ½ of 1 percent of the transaction's gross value. The agency came up with the plan to augment a huge tax collection shortfall. Aspe said the BIR would like to further study the impact of a higher tax rate on block sales to the development of the local capital market. In a separate interview, Francis Lim, PSE president and chief executive officer told reporters that the BIR memorandum was among the reasons why the volume traded in the PSE went down an average of 3.9 billion from a previous average of 5 billion since Monday, when market participants first learned of the move. “I have asked Finance Secretary Margarito Teves to reconsider this and indefinitely suspend this memorandum circular. Per my computation, owing to the lower volume turnover since Monday, the government has lost P26 million in stock transaction tax because people are holding off block sales," he said. The BIR already tried to implement the increase in tax on block sales during the administration of former BIR chief Jose Mario Buñag, but the plan was also shelved then. “That’s why I was surprised that this was revived without any consultation," Lim said. The BIR is tasked to collect P765.9 billion this year or about 17.5 percent higher than last year’s P651.9 billion. However, the agency’s tax take from January to October this year was P54.1 billion short of the P629.5 billion target. - with Cheryl Arcibal, GMANews.TV