Guidelines and Instructions for BIR Form No.

1707 [January 2018 (ENCS)]

Who shall file 2. A surcharge of fifty percent (50%) of the tax or of the
deficiency tax, in case any payment has been made on the basis
This return shall be filed in triplicate by every natural or of such return before the discovery of the falsity or fraud, for
juridical person, resident or non-resident, for sale, barter, exchange or each of the following violations:
other onerous disposition of shares of stock in a domestic a. Willful neglect to file the return within the period
corporation, classified as capital assets, not traded through the local prescribed by the Code or by rules and regulations; or
stock exchange. b. In case a false or fraudulent return is willfully made.
The Buyer/Transferee shall withhold from the seller and shall 3. Interest at the rate of double the legal interest rate for loans or
deduct from the agreed selling price and/or consideration the tax due forbearance of any money in the absence of an express
on net capital gains realized. stipulation as set by the Bangko Sentral ng Pilipinas from the
The term “Capital Asset” shall mean property held by the date prescribed for payment until the amount is fully paid.
taxpayer (whether or not connected with his trade or business), but Provided, that in no case shall the deficiency and the
does not include stock in trade of the taxpayer or other property of a delinquency interest prescribed under Section 249 Subsections
kind which would properly be included in the inventory of the (B) and (C) of the National Internal Revenue Code, as amended,
taxpayer if on hand at the close of the taxable year, or property held be imposed simultaneously.
primarily for sale to customers in the ordinary course of trade or
4. Compromise penalty as provided under applicable rules and
business, or property used in the trade or business of a character
regulations.
which is subject to the allowance for depreciation, or real property
used in trade or business. For purposes of securing the electronic Certificate Authorizing
When and Where to File and Pay Registration, the following requirements shall be submitted by the
taxpayer to the concerned Revenue District Office:
The return shall be filed and paid within thirty (30) days after
each sale, barter, exchange or other disposition of shares of stock not Mandatory : [Additional two (2) photocopies of each document]
traded through the local stock exchange with any Authorized Agent 1. Taxpayer Identification Number (TIN) of Seller/s and Buyer/s
Bank (AAB) under the jurisdiction of the Revenue District Office 2. Notarized Original Deed of Absolute Sale/Document of
(RDO) where the seller/transferor is required to register. Transfer.
In case of installment sale where the taxpayer is legally 3. Stock certificate
allowed to pay the tax by installment under certain conditions and 4. Proof of acquisition cost [i.e. Deed of Sale; Fair Market value
requirements, the return shall be filed and paid within thirty (30) days (FMV) at the time of acquisition]
after the receipt of their first down payment and within thirty (30) 5. Validated return and Original Official Receipt/Deposit Slip as
days after receipt of each subsequent installment payment with any proof of payment; for no payment return, copy of
Authorized Agent Bank (AAB) under the jurisdiction of the Revenue Acknowledgement Receipt of return filed thru eBIRForms
District Office (RDO) where the seller/transferor is required to 6. Notarized Original Special Power of Attorney (SPA) for the
register. transacting party if the person signing is not one of the parties to
the Deed of Transfer
When the return is filed with an AAB, taxpayer must 7. Secretary’s Certificate or Board Resolution, approving the
accomplish and submit BIR-prescribed deposit slip, which the bank sale/transfer of the shares of stocks and indicating the name and
teller shall machine validate as evidence that payment was received position of the authorized signatory to the Deed of
by the AAB. The AAB receiving the tax return shall stamp mark the Sale/Assignment, if the seller/transferor is a corporation
word “Received” on the return and also machine validate the return
as proof of filing the return and payment of the tax by the taxpayer, Additional Requirements, if applicable: [Additional two (2)
respectively. The machine validation shall reflect the date of photocopies of each document]
payment, amount paid and transactions code, the name of the bank,  For claiming expenses of sale - Proof of claimed deductions
branch code, teller’s code and teller’s initial. Bank debit memo such as official receipt and/or invoices
number and date should be indicated in the return for taxpayers
 For shares of stocks not listed/not traded - Latest Audited
paying under the bank debit system.
Financial Statement of the issuing corporation with computation
Payments may also be made thru the epayment channels of of the book value per share
AABs thru either their online facility, credit/debit/prepaid cards, and  For shares of stocks listed/traded - Price index from the
mobile payments. PSE/latest FMV published in the newspaper at the time of
transaction
Rate and Basis of Tax
 For club shares - Price published in newspapers on the
A final tax at the rates prescribed below shall be computed transaction date or nearest to the transaction date
based on the net capital gains realized from the sale, barter, exchange  Notarized Original SPA, if the person transacting/processing the
or other disposition of shares of stocks in a domestic corporation, transfer is not a party to the transaction
classified as capital assets, not traded through the local stock  Certificate of Exemption/BIR Ruling issued by the
exchange: Commissioner of Internal Revenue or his authorized
representative, if tax exempt
A. For Individual 15 %
 Such other documents as may be required by
B. For Corporation
law/rulings/regulations/etc.
B.1 Domestic 15 %
B.2 Foreign
Note: All background information must be properly filled
B.2.1 Not Over P100,000 5.0 %
up.
B.2.2 On any amount excess of P100,000 10 %
 The last 5 digits of the 14-digit TIN refers to the branch code
Penalties  All returns filed by an accredited tax agent on behalf of a taxpayer shall
There shall be imposed and collected as part of the tax: bear the following information:
A. For Individual (CPAs, members of GPPs, and others)
1. A surcharge of twenty-five percent (25%) in the following a.1 TIN; and
violations: a.2 BIR Accreditation Number, Date of Issue, and Date of Expiry.
a. Failure to file any return and pay the amount of tax or B. For members of the Philippine Bar (Lawyers)
installment due on or before the due date; b.1 TIN;
b. Filing a return with a person or office other than those with b.2 Attorney’s Roll Number;
whom it is required to be filed, unless otherwise authorized b.3 Mandatory Continuing Legal Education Compliance Number;
and
by the Commissioner;
b.4 BIR Accreditation Number, Date of Issue, and Date of Expiry.
c. Failure to pay the full or part of the amount of tax shown
 Onerous Transfer means transfer for value.
on the return, or the full amount of tax due for which no ENCS
return is required to be filed on or before the due date;
d. Failure to pay the deficiency tax within the time prescribed
for its payment in the notice of assessment.