31.2 Documentary Stamp Tax and Excise Taxes

Documentary Stamp Tax and Excise Taxes

Besides income and business taxes, the NIRC imposes taxes on documents and on specific goods. This section covers the documentary stamp tax on shares, debt instruments, real property conveyances, and leases, including the CMEPA reductions and exemptions from July 1, 2025, and the excise taxes on alcohol, tobacco, petroleum, automobiles, sweetened beverages, and non-essential goods.

1. Documentary Stamp Tax (DST) under Title VII

The documentary stamp tax is an excise tax on documents, instruments, loan agreements, and papers that evidence the acceptance, assignment, sale, or transfer of an obligation, right, or property. It is imposed on the document itself, so it is due even if the underlying transaction is later cancelled, and either party may pay it (both are liable).

Principal Taxable Documents (after TRAIN and CMEPA)

Worked Illustrations

• Original issue: 10,000 shares with par value of PHP 100 issued in 2026 = PHP 1,000,000 x 0.75% = PHP 7,500.
• Short-term loan: a PHP 2,000,000 loan for 180 days = 2,000,000 x 0.75% x 180/365 = PHP 7,397.
• Sale of real property: price PHP 5,000,000, zonal value PHP 6,000,000 = 6,000,000 x 1.5% = PHP 90,000.
• Lease: annual rent PHP 50,000 for 5 years: (PHP 6 + 48 x PHP 2) = PHP 102 per year, or PHP 510 for the 5-year term.

Filing: The DST return (BIR Form 2000) is filed and the tax paid within five (5) days after the close of the month in which the document was made, signed, issued, accepted, or transferred.

2. Excise Taxes on Specific Goods under Title VI

Excise taxes are imposed on specific articles manufactured or produced in the Philippines for domestic sale or consumption, or imported into the country. They are classified into:

• Specific Tax: Imposed and based on physical units of weight, volume, or measurement (e.g., per proof liter of alcohol, per pack of cigarettes, per metric ton of coal);
• Ad Valorem Tax: Imposed and based on the selling price or other specified value of the article (e.g., percentage on manufacturer's net selling price of automobiles).

Major Excisable Goods Categories

1. Alcohol Products (Sections 141-143): Distilled spirits, fermented liquors, and wines subject to combined specific and ad valorem rates;
2. Tobacco Products (Sections 144-147): Cigars, cigarettes, heated tobacco products, and vapor products (vapes/e-cigarettes) subject to annual mandatory indexation escalators;
3. Petroleum Products (Section 148): Specific taxes on gasoline, diesel, kerosene, liquefied petroleum gas (LPG), and bunker fuel;
4. Automobiles (Section 149): Graduated ad valorem rates based on the manufacturer's or importer's selling price, net of excise and VAT (4% on $\le$ PHP 600,000; 10% on PHP 600,000–PHP 1,000,000; 20% on PHP 1,000,000–PHP 4,000,000; 50% on over PHP 4,000,000). Pure electric vehicles are 100% exempt from excise tax, while hybrid vehicles are taxed at 50% of the regular rates;
5. Sweetened Beverages (Section 150-B): Imposed by TRAIN: PHP 6.00 per liter for beverages using purely caloric or non-caloric sweeteners, and PHP 12.00 per liter for beverages using purely high-fructose corn syrup (HFCS). 100% natural fruit and vegetable juices, plain milk, and unsweetened ground coffee are exempt;
6. Non-Essential Goods (Section 150): 20% ad valorem tax on jewelry, perfumes, toilet waters, yachts, and luxury water vessels.

Worked Illustrations

• Automobile: a car with a net manufacturer's selling price of PHP 1,500,000 is taxed at 20% = PHP 300,000. A hybrid car at the same price pays 50% of that rate (PHP 150,000), and a purely electric vehicle is exempt (the hybrid and electric vehicle rules are restated in Section 149 as amended by CMEPA).
• Sweetened beverages: 10,000 liters sweetened with sugar are taxed at PHP 6 = PHP 60,000; the same volume sweetened purely with high-fructose corn syrup is taxed at PHP 12 = PHP 120,000.

Excise tax is generally paid by the manufacturer or importer before removal of the goods from the place of production or before release from customs, and it forms part of the cost that is subject to VAT when the goods are sold.