Law scrapping tax on secondary trading seen to boost market
abs-cbnNEWS.com | 07/05/2009 3:52 PM
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MANILA - President Gloria Arroyo has signed into law a measure permanently abolishing the documentary stamp tax (DST) on secondary trading of shares which is expected to boost stock market investments.
Such law is crucial in creating a favorable business climate for investors amidst the global economic crisis, according to Philippine Stock Exchange (PSE) president and chief executive officer Francis Lim.
"During a period of heightened risk aversion, bringing down the costs of doing business [by removing taxes such as the DST] is a crucial trade-off to attract investments,” Lim said.
Lim noted the new law will help make the stock market more robust as investors would be enticed to place their money in high-yielding instruments minus the friction costs.
"The law frees up liquidity which investors need in order to place their money in equities again, instead of paying DST. But more than just developing the market for the long-term, we are also aiding the government in enhancing the Philippines as an investment destination by increasing the competitiveness of our bourse relative to our Asian counterparts," he said.
An earlier law that exempted DST for five years expired last March 20, 2009. Prior to this exemption, the secondary trading of shares was levied a DST equivalent to P0.75 for every P200 par value of a stock listed at the exchange.
The DST Law follows two other capital market-friendly legislations, the Personal and Equity Retirement Account Law and Credit Information System Law, which were enacted last year. The House and the Senate also passed on third reading the Real Estate Investment Trust bills before Congress went on recess last March 7.
The DST Law was first introduced by Aurora Representative Juan Edgardo Angara through House Bill No. 4900. A similar measure, Senate Bill No.2497, was filed by Senator Edgardo Angara. Senate Bill No. 3006 meantime was authored by Senator Panfilo Lacson.
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