Capital gains tax in Philippines

Capital gains in the Philippines are not subject to a single unified regime. The Bureau of Internal Revenue (BIR), administering the National Internal Revenue Code (NIRC) as amended most recently by the Tax Reform for Acceleration and Inclusion Act (TRAIN, Republic Act No. 10963, 2018) and the Capital Markets Efficiency Promotion Act (CMEPA, Republic Act No. 12214, effective July 1, 2025), applies distinct final taxes depending on whether the asset sold is real property, unlisted shares of stock, or shares traded on a stock exchange. Understanding which category an asset falls into determines the rate, the tax base, and the filing form.

For a broader overview of the Philippine tax system, see the Philippines country overview.

What is the capital gains tax rate on unlisted shares of stock?

Section 24(C) of the NIRC, as amended by TRAIN, imposes a final capital gains tax of 15% on net capital gains from the sale, exchange, or disposition of shares of stock in a domestic or foreign corporation that are not listed and traded on a stock exchange [1][2]. Net capital gain is the excess of selling price over the seller's cost basis (original acquisition cost plus allowable direct expenses). Prior to CMEPA taking effect on July 1, 2025, the 15% rate applied only to domestic corporation shares; CMEPA extended it to unlisted foreign corporation shares as well, replacing the prior graduated income tax treatment for foreign shares [3][4]. Capital losses on unlisted shares may offset capital gains of the same class; excess losses are not deductible against ordinary income. For individual taxpayers, holding-period rules apply: where a capital asset is held for more than 12 months, only 50% of the net gain is recognized; if held for 12 months or less, 100% is recognized [2].

What is the capital gains tax on real property?

Section 24(D) of the NIRC imposes a 6% final capital gains tax on the gross selling price (GSP) or fair market value (FMV), whichever is higher, on capital gains from the sale, barter, exchange, or other disposition of real property in the Philippines classified as a capital asset by an individual taxpayer [1][5]. The BIR uses zonal values published by the BIR Commissioner or the provincial/city assessor's schedule of market values, selecting the higher of the two benchmarks, to ensure the tax base cannot be artificially deflated by undervaluing the stated consideration in the deed. Importantly, no deduction for the seller's acquisition cost or improvements is allowed -- the 6% rate applies to the full GSP or FMV benchmark, not to the gain. The seller is primarily liable and must file BIR Form 1706 and pay the tax within 30 days from the date of notarization of the Deed of Absolute Sale. The Certificate Authorizing Registration (CAR), which the BIR issues as the gateway to title transfer at the Registry of Deeds, will not be released until CGT and documentary stamp tax are both paid [1][5].

How are listed shares taxed -- is there still a stock transaction tax?

Shares listed and traded on the Philippine Stock Exchange (PSE) or on designated foreign exchanges are not subject to capital gains tax. Instead, Section 127(A) of the NIRC imposes a stock transaction tax (STT) of 0.1% of the gross selling price on every sale, barter, exchange, or other disposition of listed shares [3][4]. This rate was reduced from 0.6% when CMEPA took effect on July 1, 2025 -- one of the law's explicit goals being to lower transaction costs and improve PSE market liquidity relative to regional peers [3]. The STT is a final tax collected at source: the registered broker or dealer is required to withhold and remit the STT to the BIR at each trade settlement, so the seller need not file a separate return. The STT is calculated on gross proceeds regardless of whether the seller made a gain or a loss, meaning sellers who exit a position at a loss still owe STT on the full sale proceeds [4].

Does a principal-residence exemption exist for real property CGT?

Yes. Section 24(D)(2) of the NIRC provides an exemption from the 6% CGT for the sale of a natural person's principal residence, provided all of the following conditions are met [1][5][6]:

1. The entire proceeds from the sale are fully utilized to acquire or construct a new principal residence within 18 months from the date of sale or disposition.
2. The seller notifies the BIR (through the Revenue District Office of jurisdiction) of the intent to claim the exemption within 30 days from the date of sale, concurrent with filing BIR Form 1706.
3. The historical cost of the old principal residence carries over to the new one, preserving the gain for potential future taxation.
4. The exemption may only be claimed once every 10 years by the same taxpayer.

If the full proceeds are not reinvested within the 18-month window, or if only a portion is reinvested, the proportional unused amount becomes subject to 6% CGT retroactively, with applicable interest and surcharges. The exemption is available to Filipino citizens and resident aliens; non-resident aliens are generally not eligible [6]. Documentary stamp tax on the conveyance deed remains due regardless of the CGT exemption.

What documentary stamp tax applies to real property and share transfers?

Documentary stamp tax (DST) is a separate obligation from capital gains tax and must be paid concurrently for the BIR to release the Certificate Authorizing Registration on real property or process share transfer documentation [1][5].

For real property conveyances (deeds of sale, assignments, or transfers), DST is imposed at PHP 15.00 for every PHP 1,000.00 (or fractional part thereof) of the higher of consideration or fair market value -- equivalent to 1.5% [5]. This rate was not changed by TRAIN, CREATE, or CMEPA.

For transfers of shares of stock, DST is PHP 1.50 per PHP 200.00 of par value -- a rate likewise unchanged by CMEPA, which only reduced DST on the original issuance of shares (from 1% to 0.75% of par value) [3][4]. Transfers of shares listed on local or foreign stock exchanges are exempt from DST under CMEPA.

All capital gains and documentary stamp obligations are payable at the BIR Revenue District Office with jurisdiction over the location of the property (for real property) or the seller's registered address (for shares). Penalties for late filing are 25% surcharge plus 12% annual interest under the NIRC.

Individual tax circumstances -- including residency status, whether property is a capital or ordinary asset, holding period, and specific transaction structure -- affect outcomes materially. Consult a qualified tax professional, such as a Philippine Certified Public Accountant or tax lawyer registered with the Professional Regulation Commission, before entering into any real property or share disposition transaction.