Documentary Stamp Tax on the Sale or Transfer of Unlisted Shares of Stock (NIRC Section 175)

Selling or transferring shares of stock that are not listed on a stock exchange carries documentary stamp tax (DST) under NIRC Section 175 at ₱1.50 for every ₱200 of par value — 0.75% — and the base is the par value, not the price you actually sold the shares for. This DST is separate from, and on top of, the 15% capital gains tax on the net gain, so an unlisted-share sale carries two distinct taxes.

The Section 175 rate: 0.75% of par value #

NIRC Section 175 imposes DST on a sale or transfer of shares at ₱1.50 per ₱200 of par value, and only one such tax applies per transfer regardless of how many certificates change hands. The provision states:

“…there shall be collected a documentary stamp tax of One peso and fifty centavos (P1.50) on each Two hundred pesos (P200), or fractional part thereof, of the par value of such stock: Provided, That only one tax shall be collected on each sale or transfer of stock from one person to another, regardless of whether or not a certificate of stock or obligation is issued, indorsed, or delivered in pursuance of such sale or transfer: and Provided, further, That in the case of stock without par value the amount of the documentary stamp tax herein prescribed shall be equivalent to fifty percent (50%) of the documentary stamp tax paid upon the original issue of said stock.”

— NIRC of 1997, Section 175, as amended by RA 10963 (TRAIN)

The rate rose to ₱1.50 per ₱200 under the TRAIN Law (from ₱0.75 pre-TRAIN) and — unlike the DST on original share issuance, which CMEPA touched — the Section 175 rate on secondary transfers was left unchanged by later reforms. For the original-issuance rules and the CMEPA rate cut that applies there, see Documentary Stamp Tax on Original Issuance of Shares of Stock: The New CMEPA Rate.

Par value, not selling price — the key trap #

The Section 175 DST is computed on the par value of the shares, so the price you sold them for is irrelevant to the DST — a share with a ₱100 par value carries the same DST whether it sells for ₱100 or ₱10,000. This surprises sellers who assume every share tax follows the money. Only the capital gains tax follows the gain; the DST follows par value. For no-par shares, the DST is instead 50% of the DST that was paid when the shares were originally issued.

DST and capital gains tax both apply #

A sale of unlisted shares triggers two separate taxes: the Section 175 DST on par value, and the 15% capital gains tax under Section 24(C) on the net capital gain (selling price minus cost). They are computed on different bases and neither replaces the other. The 15% net capital gains tax is covered in BIR Form 1707: Capital Gains Tax on Shares of Stock. Note a common confusion: the 15% here is the shares rate; the 6% figure people sometimes cite is the real property capital gains rate, not shares.

File on BIR Form 2000-OT within five days after month-end #

A transfer of unlisted shares is reported on BIR Form 2000-OT, filed and paid within five days after the close of the month in which the deed of sale or assignment was made. This is the one-time-transaction DST return, distinct from the recurring BIR Form 2000 used by regular DST filers — see BIR Form 2000 vs 2000-OT for Documentary Stamp Tax. Shares traded through the local stock exchange are exempt from Section 175 DST and are instead subject to the stock transaction tax under Section 127, so this DST applies only to unlisted, off-exchange transfers.

Worked example: selling ₱1,000,000 par value of unlisted shares #

Assume a shareholder sells unlisted shares with a total par value of ₱1,000,000 for a selling price of ₱1,500,000, having acquired them for ₱1,000,000. The DST follows par value; the capital gains tax follows the gain.

The DST of ₱7,500 would be identical even if the shares had sold for far more or far less — it is fixed by the ₱1,000,000 par value. The capital gains tax, by contrast, moves entirely with the ₱500,000 gain. Keeping the two bases straight avoids both underpayment and overpayment.

Frequently asked questions #

What is the documentary stamp tax rate on the sale of unlisted shares? #

Under NIRC Section 175, documentary stamp tax on a sale or transfer of shares is ₱1.50 for every ₱200 (or fractional part) of the par value of the stock — 0.75%. For shares without par value, the tax is 50% of the documentary stamp tax paid on the original issuance of the shares.

Is the documentary stamp tax based on the selling price or par value? #

On par value, not selling price. For par-value shares, Section 175 computes the tax on the par value regardless of how much the shares actually sold for. This differs from the capital gains tax, which is computed on the net gain (selling price less cost).

Does capital gains tax also apply to a sale of unlisted shares? #

Yes. A sale of unlisted shares triggers both documentary stamp tax under Section 175 (on par value) and capital gains tax under Section 24(C) at 15% on the net capital gain (selling price less acquisition cost). They are separate taxes and both apply to the same sale.

Which BIR form is used and when is it due? #

BIR Form 2000-OT, the Documentary Stamp Tax Declaration for one-time transactions, is used for a transfer of unlisted shares. It is filed and the tax paid within five days after the close of the month in which the taxable document (the deed of sale or assignment) was made, signed, or issued.

Are shares traded on the stock exchange subject to Section 175 DST? #

No. Shares sold or transferred through the local stock exchange are exempt from the Section 175 documentary stamp tax. They are instead subject to the stock transaction tax under NIRC Section 127. Only shares not traded through the exchange carry the Section 175 DST.

Summary #

An unlisted-share sale is taxed twice, on two different bases: documentary stamp tax under Section 175 at 0.75% of par value, and capital gains tax under Section 24(C) at 15% of the net gain. The DST base is par value — not the selling price — and it is filed on BIR Form 2000-OT within five days after the month of the transfer. Compute each on its correct base, remember that exchange-traded shares follow the Section 127 stock transaction tax instead, and confirm current rates on the BIR website.