Philippines removes stamp tax on stock trading

MANILA, July 5 - Philippine President Gloria Macapagal Arroyo has signed a law permanently removing documentary stamp tax on the sale, barter or exchange of listed shares to stimulate the market and make it more attractive to investors.

The law, signed on June 30, comes at a time when the government is trying to collect more revenues to fund a wider budget deficit of 250 billion pesos ($5.2 billion) this year.

"During a period of heightened risk aversion, bringing down the costs of doing business is a crucial trade-off to attract investments," Philippine Stock Exchange (PSE) president and chief executive officer Francis Lim said in a statement at the weekend.

The new law will replace a 2004 law that suspended the imposition of documentary stamp tax on stock transactions for five years.

Prior to the exemption, the secondary trading of shares was levied a documetary stamp tax equivalent to 0.75 pesos for every 200-peso par value of a stock listed at the exchange, the PSE said.

Finance officials said earlier they were amenable to extending the documentary stamp tax exemption to five more years but not to making it permanent.

The government stands to lose 1.4 billion pesos in revenues every year from the new law, Department of Finance estimates showed. ($1=48.09 pesos)