Documentary Stamp Tax on Loan Agreements and Promissory Notes: The New CMEPA Rate

Documentary stamp tax (DST) on a loan agreement, promissory note, or other debt instrument is currently 0.75% of the issue price — ₱1.50 for every ₱200 (or fraction) — following the Capital Markets Efficiency Promotion Act (CMEPA, Republic Act No. 12214), effective July 1, 2025. Like the DST on shares of stock, this is a rate cut from the 1% (₱2.00 per ₱200) that applied under the TRAIN Law, and it applies to instruments many businesses assume are outside DST entirely, including intercompany loans.

The legal basis and current rate #

Section 179 of the National Internal Revenue Code (NIRC) taxes “all debt instruments” — debentures, certificates of indebtedness, due bills, bonds, loan agreements, and both negotiable and non-negotiable promissory notes. The TRAIN Law (Republic Act No. 10963), through RR No. 4-2018, set this at ₱2.00 per ₱200 of issue price (1%), effective January 2018. CMEPA (Republic Act No. 12214), signed May 29, 2025, reduced Section 179 alongside Sections 174, 176, and 199, cutting the rate to ₱1.50 per ₱200 (0.75%). The BIR implemented this through RR No. 19-2025, issued August 5, 2025, applying to debt instruments issued on or after July 1, 2025.

How it’s computed, and pro-rating for short terms #

DST on a debt instrument is based on its issue price or face amount, and instruments with a term under one year are pro-rated by the fraction of the year the instrument runs. For a loan with a term shorter than 365 days, the tax due is the full-year rate multiplied by (term in days ÷ 365). Where a loan agreement is secured by a promissory note covering the same debt, only one DST applies to the transaction — the tax is not stacked on both documents evidencing the same loan.

Worked example #

A company borrows ₱5,000,000 under a 9-month promissory note issued in August 2026.

A one-year loan of the same amount, by contrast, would carry the full ₱37,500 with no pro-ration.

Intercompany advances are not automatically exempt #

A common misconception is that advances between related companies — recorded only through journal vouchers or instructional letters rather than a formal loan contract — fall outside DST. The Supreme Court has held otherwise. In CIR v. Filinvest Development Corp. (2011), the Court ruled that intercompany advances evidenced by instructional letters, journal vouchers, and cash vouchers still constitute “loan agreements” for DST purposes, even without a signed promissory note. The BIR formalized this position through RMC No. 48-2011, directing examiners to assess deficiency DST on such advances found during audit. This site’s Day in Court coverage of San Miguel v. CIR discusses how the related Filinvest DST doctrine was later applied retroactively — worth reading alongside this post if your company books regular intercompany advances without formal loan documentation.

Filing: BIR Form 2000-OT, five-day deadline #

DST on a loan agreement or promissory note is filed and paid using BIR Form 2000-OT within five days after the close of the month the document was made, signed, issued, or accepted. Liability under Section 173 of the NIRC falls on either party to the instrument — whoever makes, signs, issues, accepts, or transfers it — and liability is effectively joint and several between the parties. If one party to the loan is tax-exempt, the non-exempt party becomes directly liable for the full amount of the tax.

A narrow personal-loan exemption #

Section 199 of the NIRC exempts certain instruments from DST, including loan agreements or promissory notes not exceeding an aggregate of ₱250,000 executed by an individual to finance the purchase of personal or household items on an installment basis. CMEPA’s amendments to Section 199 focused on capital-market instruments — exempting shares traded through a stock exchange and mutual fund transactions — rather than this personal-loan carve-out, so the ₱250,000 threshold is not something CMEPA is understood to have changed. Confirm current details with your tax adviser before relying on this exemption for a specific transaction, since exemptions are narrowly construed on audit.

Summary #

DST on loan agreements and promissory notes now costs 0.75% of issue price (₱1.50 per ₱200) instead of the TRAIN-era 1%, effective for instruments dated July 1, 2025 onward under CMEPA and RR No. 19-2025 — and it applies to intercompany advances documented only by journal vouchers, not just formal loan contracts. File on BIR Form 2000-OT within five days after month-end. For the equity-side counterpart to this update, see Documentary Stamp Tax on Original Issuance of Shares of Stock, and for the general DST framework, Documentary Stamp Tax: What It Is and When BIR Form 2000 Applies.