Face higher taxes, gov’t reminds listed firms below public float req’t

MANILA, Philippines – Government officials stand firm on the “punishments” they will impose on listed firms that do not comply with the minimum public ownership requirement as the December 31 deadline looms.

Securities and Exchange Commission (SEC) chairwoman Teresita Herbosa said listed firms that do not meet the 10% minimum public float requirement may not be immediately delisted, but they will face higher transaction taxes.

Buying and selling of these non-compliant firms’ shares will be subject to the 6% capital gains tax, not the half percent stock transaction tax, Herbosa said in an ANC interview at the December 3 anniversary dinner of the Philippine Stock Exchange (PSE).

“If they don’t meet the [10%] minimum [public float], then the sale of their shares get subject to the full tax,” she said, as reported by ANC.

She added that “They are not automatically delisted yet. I think they go on a suspended status…I don’t know what kind of status they will have in the meantime, you are paying the full tax and remain listed, your shares will definitely not be subject to the lower stock transaction tax,” she said.

The affected companies are given 6 months before the PSE delists them.

Among those who will be affected are the rich families that still own almost majority of the listed firms. ANC explained that their shares, then booked way below what they are worth now, will be subjected to huge capital gains tax when they delist or sell.

ANC quoted Bureau of Internal Revenue (BIR) commissioner Kim Henares as saying that this move will part of the reforms that aim to make the capital markets more robust.

By forcing the tightly controlled firms to open up to more investors, more players can participate in the investment activities in the country and keep the listed firms — including the biggest in the country — in check through disclosure rules.

In the previous months, several companies have already opted to delist, while others increased the shares they offer to the public.

Earlier, Finance Secretary Cesar Purisima said pushing these reforms now are timely since the PSE has been doing very well, mirroring the positive investor sentiments toward the Philippines.

As of December 4, the PSE main index breached the 5,700 level, and breaking the all-time high records for the 34th time this 2012. – Rappler.com