PSE lauds Congress okay of bill exempting stocks from documentary stamp tax

The Philippine Stock Exchange has lauded the approval of a bill in Congress that will permanently exempt shares traded in the bourse from the documentary stamp tax, hoping such a move will encourage more people to invest in the stock market.

PSE president and chief executive officer Francis Lim said the bill, authored by Aurora Rep. Juan Edgardo M. Angara, is aimed reducing the trading costs for investors and boost the liquidity of the stock market.

“We are well aware that high friction costs are a disincentive for investors when they decide to place their money in any market,” Lim said.

At present, the trading of shares through the exchange is exempted from the DST for a period of five years or until March 2009 as provided under Republic Act 9243. Prior to the enactment of this law in March 2004, the secondary trading of shares of stocks was subject to a DST equivalent to 75 centavos for every P200 par value of a stock listed at the exchange.

“We cannot afford to have this disincentive for our investors. Our market still needs to grow especially when our stock market has been lagging way behind compared with our Asian neighbors, ” Lim said. 

Data from the PSE showed that the average daily value turnover jumped to a record high of P5.5 billion from a meager P589 million in 2003.

“Trading activity in the stock market has posted significant increases since 2004 and I think it is no accident that this rise coincided with the suspension of the collection by our government of DST on stock trading,” Lim noted.

The DST bill will be up for deliberation at the Senate Committee on Ways and Means on Tuesday. “ We remain hopeful that our Senators will agree with our position that this legislative measure is essential to keep our stock market afloat during these challenging times,” Lim said.           – Zinnia B. Dela Peña