The Philippine Stock Exchange (PSE) and Bureau of Internal Revenue (BIR) could resolve in the next few days a contentious issue relating to the tax regulator’s proposal to impose higher tax charges on stock transactions involving firms falling short of the 10-percent minimum public float rule.
“There is going to be continued discussions but I think there can be a mutually acceptable solution by the end of the week,” BIR Commissioner Kim Jacinto-Henares said in a phone interview on Monday.
She did not give specifics, saying an agreement—when reached—will be revealed at the appropriate time.
Her comments were sought after a high-level meeting with the PSE and banking officials late on Monday. The talks were described by private-sector players as a last-ditch effort to resolve the situation amicably.
PSE President and Chief Executive Officer Hans Sicat said in a text message that Monday’s meeting went “well,” while noting that talks would continue with the BIR, the Department of Finance and the Securities and Exchange Commission.
The development brings a measure of comfort for investors and stockbrokers, who would be directly affected by the BIR’s plan.
“It’s a good development. The PSE is already [doing its part] to boost liquidity,” Joey Roxas, president of stock-brokerage firm Eagle Equities Inc., said in a phone interview on Monday.
The tax regulator was set to impose the 5-percent to 10-percent capital-gains tax, instead of the preferential rate of one-half of 1 percent on stock transactions involving noncompliant firms. It said this would prompt firms not meeting the minimum public-float rule to widen their ownership profiles.
The PSE contested the plan while asserting that there was no legal basis for the BIR to apply the tax ruling.
The PSE’s own rules require firms to meet the minimum free-float rule by November 30, but this will be followed by a three-year curing period during which noncompliant firms will be charged higher listing fees.
If those companies have not yet met the minimum public-ownership requirement by the end of the curing period, delisting procedures would start, the PSE said.
Sicat told reporters on Friday the bourse may offer a “shortened” curing period to find a middle ground with the BIR.
The meeting on Monday also covered another contentious issue, which is the imposition of the 20-percent final withholding tax on the P35-billion Poverty Eradication and Alleviation Certificate bonds that were supposed to mature on Tuesday. Henares said the issue was with the courts.
“Until we submit our response to the court, it would not be right to discuss what our response will be,” she said.
The tax implementation was temporarily stopped by the Supreme Court after a petition last week by bondholders, which include some of the country’s largest banks.
(With VG Cabuag)
