Documentary Stamp Tax on Lease Agreement Train Law

If you`re a landlord or tenant in the Philippines, it`s important to be aware of the documentary stamp tax (DST) on lease agreements that was updated under the Train Law, or Tax Reform for Acceleration and Inclusion Act. This tax reform was signed into law in 2017 to increase government revenue and provide tax relief to Filipinos.

Under the Train Law, the DST for lease agreements increased from PHP 1.50 to PHP 15 for every PHP 1,000 worth of the total contract price or value of the lease agreement. This means if you`re renting a property for PHP 10,000 a month, the DST would be PHP 150. This tax is due upon signing the lease agreement and is paid by the lessee, or the tenant.

The DST is in addition to the other taxes and fees that may be required for lease agreements, such as value-added tax (VAT) for commercial leases or local taxes and fees. It`s important to factor in all these costs when calculating the total expenses for renting a property.

To comply with the DST requirements, the lease agreement must be affixed with documentary stamps, which can be purchased from authorized agents or at Bureau of Internal Revenue (BIR) offices nationwide. The stamps must be canceled or marked as “used” by the BIR before the lease agreement can be considered valid.

Failure to comply with the DST requirements can result in penalties and fines, which can be up to 10 times the amount of the unpaid DST. It`s important to ensure that all taxes and fees are paid on time to avoid any legal issues and maintain a good relationship with your landlord or tenant.

In conclusion, the documentary stamp tax on lease agreements under the Train Law is an important consideration for landlords and tenants in the Philippines. It`s important to be aware of the increased tax rate and to comply with all DST requirements to avoid penalties and fines. Consult with a tax expert or seek guidance from the BIR if you have any questions or concerns regarding DST or any other tax issues.

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