Documentary Stamp Tax

TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session 25 1UL 14 100:49 SENATE We," S. No. - Introduced by Senator Francis G. Escudero AN ACT EXEMPTING THE PLEDGE OF PERSONAL PROPERTY COVERING A LOAN OF MONEY NOT EXCEEDING TEN THOUSAND PESOS (P10,000.00) FROM DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE SECTION 199 TITLE VII OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED EXPLANATORY NOTE The Constitutional mandate that taxation shall be just, fair, equitable, and reasonable cannot be more profound than in the context of today's looming economic reality. Faced with the current situation of the economy, any tax reform effort and revenue scheme should not only be judged according to its fiscal adequacy, equity, and administrative feasibility, but more importantly its impact on poverty, income distribution, and economic growth. Recent amendments to the National Internal Revenue Code, as amended, are manifestations that the legislature has, in fact, taken this stance. Both Houses of Congress have consistently pushed for legislative measures that aim to provide relief to taxpayers, recognizing that taxation is not solely about raising revenues, but also about accomplishing social objectives. This bill proposes that documents evidencing the receipt of personal property as security for the payment of a certain sum of money, i.e. a contract of pledge, where the loaned amount does not exceed ten thousand pesos (PhP 10,000.00) be exempt from payment of the documentary stamp tax (DST). Passage of this bill is justified by the reality that the transactions of this value ordinarily and regularly occur among those belonging to the marginalized sectors of our society. Finding themselves in dire financial situations, they resort to pledging their personal properties in order to borrow money from individuals and/or lending institutions. But because the Tax Code is indifferent on whose liability the payment of

DST falls, it is often absorbed by the one making the pledge as part of the cost of the loan transaction. This is ironic because while the pledge is the one pressed for cash, he still has to cut a share of the proceeds of the loan to pay for the DST. In this context, the urgent approval of this bill is earnestly recommended. FRANCIS' G. ESCUDERO

TWENTIETH CONGRESS OF THE ) HUL. 14 100:49 First Regular Session SENATE S. No. _ Introduced by Senator Francis G. Escudero AN ACT EXEMPTING THE PLEDGE OF PERSONAL PROPERTY COVERING A LOAN OF MONEY NOT EXCEEDING TEN THOUSAND PESOS (P10,000.00) FROM DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE SECTION 199 TITLE VII OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED Be it enacted by the Senate and House of Representatives of the Philippines in Congress assemble

Section 1. Section 199 of the National Internal Revenue Code of 1997 is hereby

amended to read as follows: "Sec. 199. Documents and Papers Not Subject to Stamp Tax. - The provisions of Section 173 to the contrary notwithstanding, the following instruments, documents and papers shall be exempt from the documentary stamp tax: "(a) xxx; "XXX; "(O) DOCUMENTS OR OTHER PAPERS EVIDENCING THE RECEIPT OF PERSONAL PROPERTY AS SECURITY FOR THE PAYMENT OF ANY DEFINITE AND CERTAIN SUM OF MONEY WHERE THE PRINCIPAL AMOUNT LOANED DOES NOT EXCEED TEN THOUSAND PESOS (P10,000.00)."

Sec. 2. Repealing Clause. - All laws, presidential decrees, executive orders,

rules and regulations, or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly.

Sec. 3. Effectivity. - This Act shall take effect fifteen (15) days after its

5 publication in the Official Gazette or at least two (2) newspapers of general circulation. Approved,