Gov’t eyes P4.9-B from DST on financial instruments

The government is expecting to collect at least P4.9 billion from the implementation of a law that rationalized documentary stamp taxation (DST) on financial instruments.

The Department of Finance (DOF) said the bulk of the incremental revenues would come from the DST on special savings instruments like time deposits.

The new law, in effect, would remove the DST on the secondary trading of debt and equity instruments to allow the growth of the domestic capital market.

The law also re-calculated the DST on financial instruments, including insurance and pre-need policies, debt instruments and equity instruments.

The applicable DST on the primary issuance of debt instruments has been raised to P1 from the original 30 centavos. On the other hand, the DST on the primary issuance of equity papers has been decreased from P2 to P1.

The DOF said the applicable DST on insurance and pre-need policies was also adjusted. In the old law, the DST was calculated as a percentage of the insurance policy and annuities. Under the new law, the tax will be based on the premium.

These adjustments, the DOF said, would generate a net revenue of P4.9 billion. The adjustment of the DST on equity papers would generate a revenue loss of P170 million in the primary issue and an additional loss of P1.18 billion in the secondary issue.

However, the adjustment of the DST on debt papers would generate an additional P1.4 billion from privately-issued instruments and a total of P1.9 billion from government securities.