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PSE-Listed Firms May Lose Tax Breaks

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

02 December 2010


The Philippines Department of Finance is to insist that, to maintain their tax incentives, listed companies will need to prove their compliance with the minimum 20% public holding of their share capital.

The Finance Secretary, Cesar Purisima, is to instruct the Bureau of Internal Revenue (BIR) to inform the Securities and Exchange Commission that the minimum public float requirement should be complied with at all times.

The requirement, he said, is necessary, not only to protect the country’s tax revenues, but also to encourage foreign investors into the Philippine Stock Exchange (PSE) by providing more liquidity to each listing and, thereby, making it more transparent and attractive to both local and foreign investors.

If not, the BIR will warn that the applicable final tax of 5% on net capital gains of up to PHP100,000 (USD2,250), and 10% for net gains above that amount, from the sale of shares in non-compliant companies, will be imposed.

The BIR has ascertained that there are many listed companies which have floated less than 20% of their shares. It was reported that it has given those companies six months to comply, before their tax position is reviewed.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
TAGS: capital gains tax (CGT) | compliance | tax | investment | business | tax incentives | equity investment | Philippines | offshore | stock exchanges

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