BIR Form 1707: Capital Gains Tax Return for Sale of Shares of Stock Not Traded on the Stock Exchange

BIR Form 1707 is the Capital Gains Tax Return for the onerous transfer of shares of stock in a domestic corporation classified as a capital asset and not traded through the local stock exchange. Under the TRAIN Law (Republic Act No. 10963), the seller — individual or corporate, resident or non-resident — pays a flat 15% final tax on the net capital gain from each sale, barter, exchange, or other disposition, and must file and pay within 30 days of the transaction.

This guide covers who files BIR Form 1707, how the 15% tax is computed, how fair market value is determined for shares that have no public trading price, and a worked example for a closely-held domestic corporation. For gains on real property instead of shares, see BIR Form 1706: How to File Capital Gains Tax on Sale of Real Property; for the annual consolidation return that sits alongside this one, see BIR Form 1707-A: Annual Capital Gains Tax Return for Shares of Stock.

What transactions require BIR Form 1707? #

BIR Form 1707 applies whenever shares of stock in a domestic corporation, held as a capital asset and not traded through the local stock exchange, are sold, bartered, exchanged, or otherwise disposed of for value. This most commonly covers shares in closely-held or family-owned corporations, private startups, and other domestic companies that have never listed on the Philippine Stock Exchange — the transaction never touches a broker or the exchange floor, so it falls outside the separate stock transaction tax regime that applies to listed-share trades.

The return is filed by the seller (transferor), regardless of whether the seller is:

• A resident or non-resident individual
• A domestic or foreign corporation
• Making a single isolated sale or a series of sales during the year

Shares held as an ordinary asset — for example, shares actively traded as inventory by a dealer in securities — are taxed differently and fall outside this final capital gains tax regime.

How is the 15% capital gains tax computed? #

The tax due is 15% of the net capital gain, computed as the higher of gross selling price or fair market value, less the seller’s cost basis in the shares and any allowable deductions from the sale. This is a flat, final tax under NIRC Section 24(C) for individuals and NIRC Section 27(D)(2) for domestic corporations, both as amended by the TRAIN Law — unlike ordinary income tax, there is no graduated bracket and no netting against unrelated losses outside the same taxable transaction.

Because unlisted shares have no quoted market price, the BIR does not simply accept the contract price at face value. Under Revenue Regulations No. 20-2020, fair market value is determined as follows:

RR No. 20-2020 replaced the older Adjusted Net Asset Method under Revenue Regulations No. 6-2013, which required appraising the corporation’s real property holdings at current fair value — a more burdensome exercise that the newer rule removed for most transactions.

Whichever of gross selling price or the RR No. 20-2020 fair market value is higher becomes the tax base before subtracting the seller’s documented cost basis.

Worked example: selling shares in a closely-held domestic corporation #

An individual shareholder acquired 10,000 shares of a closely-held domestic corporation for ₱500,000 several years ago and now sells the entire block to another individual for ₱1,200,000 cash. The corporation’s latest audited financial statements show a book value of roughly ₱1,100,000 for that block of shares — lower than the agreed selling price, so the selling price governs as the higher figure.

The seller files BIR Form 1707 and pays the ₱105,000 within 30 days of the notarized deed of sale or assignment. Separately, the transfer of the shares themselves is also subject to documentary stamp tax under NIRC Section 175, at ₱1.50 for every ₱200 of par value transferred — a distinct tax from the capital gains tax and reported on its own documentary stamp tax return, not on BIR Form 1707.

Filing deadline and required attachments #

BIR Form 1707 and the corresponding tax payment are due within 30 days after each sale, barter, exchange, or other disposition of unlisted shares — a much tighter window than the annual income tax cycle, since each transaction is its own final-tax event rather than something reported once a year.

Typical supporting documents include:

1. Notarized Deed of Sale, Assignment, or equivalent transfer document
2. The original stock certificate being transferred (or proof of the certificate)
3. Proof of the seller’s acquisition cost
4. The corporation’s latest audited financial statements, to support the RR No. 20-2020 fair market value

Missing the 30-day window exposes the seller to the standard late-filing penalty stack — surcharge under NIRC Section 248 and interest under NIRC Section 249 — the same civil additions covered in BIR Late Filing Penalties.

BIR Form 1707 vs. BIR Form 1706 at a glance #

Both are final capital gains taxes on one-time transactions (ONETT), but the asset class, tax base, and rate differ — do not use one form’s rules to estimate the other’s liability.

Frequently asked questions #

What is BIR Form 1707? #

BIR Form 1707 is the Capital Gains Tax Return for the onerous transfer — sale, barter, exchange, or other disposition — of shares of stock in a domestic corporation that are not traded through the local stock exchange. It is filed and the tax paid within 30 days after each transaction.

What is the capital gains tax rate on unlisted shares of stock? #

The rate is a flat 15% on the net capital gain realized from the sale, barter, exchange, or other disposition of shares of stock in a domestic corporation not traded through the local stock exchange. This rate applies to both individuals, under NIRC Section 24(C), and domestic corporations, under NIRC Section 27(D)(2), as amended by the TRAIN Law (Republic Act No. 10963).

How is the fair market value of unlisted shares determined? #

Under Revenue Regulations No. 20-2020, the fair market value of unlisted common shares is prima facie the book value based on the latest available audited financial statements, not earlier than the taxable year immediately preceding the sale. Preferred shares are valued at their liquidation value. This replaced the older Adjusted Net Asset Method, which required appraising the corporation’s real property.

How does BIR Form 1707 differ from BIR Form 1706? #

BIR Form 1707 taxes gains from selling shares of stock in a domestic corporation not traded on the stock exchange, at a flat 15% of net capital gain. BIR Form 1706 taxes gains from selling real property classified as a capital asset, at a flat 6% of the highest of gross selling price, zonal value, or assessed value. Both are final capital gains taxes, but they apply to different asset classes and use different tax bases.

Do I still need to file BIR Form 1707-A if I already filed BIR Form 1707? #

Yes. BIR Form 1707 is filed within 30 days after each individual sale of unlisted shares, while BIR Form 1707-A is a separate, additional annual return consolidating all such transactions for the taxable year, due on or before the 15th day of the fourth month after the taxable year closes. Filing 1707-A does not substitute for the per-transaction 1707, and vice versa.

Summary #

BIR Form 1707 reports a flat 15% final tax on the net capital gain from selling shares of stock in a domestic corporation that never traded on the local stock exchange, due within 30 days of the sale under NIRC Sections 24(C) and 27(D)(2) as amended by the TRAIN Law. The tax base runs off the higher of selling price or the RR No. 20-2020 fair market value, less the seller’s documented cost. Filing this per-transaction return does not end a shareholder’s paperwork for the year — see BIR Form 1707-A: Annual Capital Gains Tax Return for Shares of Stock for the consolidated annual filing that sits alongside it.