Philippine Bourse Welcomes Suspension Of Tax Hike

by Mary Swire, Tax-News.com, Hong Kong

14 September 2005

The president of the Philippine Stock Exchange (PSE), Francis Lim, has welcomed a decision by the government to suspend a tax hike on block sales, a move he believes will help stimulate the development of the country's stock market.

A memorandum issued by the Bureau of Internal Revenue (BIR) last month proposed the introduction of capital gains tax at a rate of 5% on the first PHP100,000 and 10% above this threshold on block sales - pre-negotiated transactions carried out through the stock exchange - instead of the transaction tax, which is levied at 0.5%.

In a statement, Mr Lim welcomed the BIR's decision to defer the tax, which he said would have imposed an additional cost and would deter investors from trading on the exchange.

Lim stated that if the policy hadn't been reversed, the result would have been that investors would "opt out of the stock market, thereby defeating the basic policy of our government to develop an active and vibrant capital market".

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