The private sector will seek clarity on Friday from the Bureau of Internal Revenue (BIR) relating to the agency’s plan to impose higher tax charges on stock transactions involving listed companies that do not meet the 10-percent minimum public-float requirement by the end of next month.
The issue has raised eyebrows among industry players, including the Philippine Stock Exchange, which asserted that the BIR cannot legally apply such a tax ruling and that the plan is “confusing” investors.
The BIR said stock transactions involving noncompliant firms should be slapped with the 5-percent to 10-percent capital-gains tax instead of the preferential rate of one-half of 1 percent.
It said such a measure would only help boost liquidity in the capital markets as noncompliant firms will be given more incentive to widen their ownership profiles.
A meeting later on Friday by the Capital Market Development Council (CMDC) will be the venue to bring up the issue, BDO Capital and Investment Corp. President Eduardo Francisco said in an interview.
Francisco sits as the private-sector representative in CMDC, which is co-chaired by the Department of Finance and Securities and Exchange Commission.
“We will mention this issue and I hope we will come to a solution. There should be a single message to investors,” he said.
Internal Revenue Commissioner Kim Jacinto-Henares reiterated in a separate interview that her department will proceed with its plan to raise taxes on stock transactions once the deadline passes.
Henares told the BusinessMirror in a phone interview that the BIR may require the PSE to submit an updated list of firms that have yet to comply with the minimum free-float rule by October 31.
“If firms do not qualify, then they should not be entitled to that preferential rate,” Henares said.
At present, there are more than 40 listed firms that have yet to meet the rule, including larger companies like Petron Corp., Metro Pacific Tollways Corp., San Miguel Pure Foods Co. Inc., Filinvest Development Corp. and San Miguel Brewery Inc.
Eduardo Olbes, head of corporate and investment banking at Security Bank Corp., said the BIR proposal will face implementation problems.
“So far, brokers are saying it’s impossible to implement and it’s not legally clear. How can some stocks be transacted at one tax and others at a different tax?” he said in a separate interview.
PSE President and Chief Executive Officer Hans Sicat said earlier the bourse is likely to oppose any attempt by the BIR to impose the capital-gains tax on stock transactions.
For its part, the BIR maintained that a higher public float will provide liquidity to investors while preventing price manipulation. The BIR planned to impose the capital-gains tax earlier but later decided to defer this action until the November 30 deadline of the PSE lapses.
