Documentary Stamp Tax (2026 Guide)

What is documentary stamp tax?

Who pays documentary stamp tax?

Required for

The person who makes, signs, issues, accepts, or transfers a taxable document, instrument, or paper (whether an individual, corporation, partnership, or other entity) is liable for DST (NIRC § 173). In practice it falls on the party benefiting most, such as the buyer in a deed of sale, the borrower in a loan, or the insured under a policy.

Optional for

Parties to a transaction may agree among themselves on who shoulders the DST, but the statutory liability under NIRC § 173 remains until the tax is paid.

Exempt

Documents and transactions specifically exempt under NIRC § 199 or special laws, including sales of shares listed and traded through a local or foreign stock exchange, mutual fund share issuances and redemptions, and fraternal society insurance; life insurance of ₱100,000 or less is exempt under NIRC § 183.

Worked examples

1. Example 1

   Maria sells her residential property in Manila for ₱2,500,000. The zonal value is lower than the price. DST is due on the deed of sale.

   Tax base (higher of price or fair market value) = ₱2,500,000
   DST rate for real property sales = ₱15 per ₱1,000 or fraction
   Calculation: (₱2,500,000 ÷ ₱1,000) × ₱15 = 2,500 × ₱15 = ₱37,500
   

   Result: ₱37,500 in DST is due on the deed of sale, declared on BIR Form 2000-OT within five days after the close of the month the deed was signed. The parties agree on who pays it; by custom it is often the buyer.

2. Example 2

   Juan borrows ₱750,000 from BDO Bank for a business expansion. The loan agreement is signed in 2026 for a two-year term.

   Issue price (principal) = ₱750,000
   DST rate for debt instruments (CMEPA, from July 1, 2025) = 0.75%
   Calculation: ₱750,000 × 0.75% = ₱5,625
   

   Result: ₱5,625 in DST covers the loan agreement, promissory note and any mortgage securing the loan. The bank usually collects it from the proceeds and remits it.

3. Example 3

   ABC Corporation leases a commercial office space in Makati for ₱500,000 annually for a three-year term. The lease agreement is executed on January 15, 2026.

   Annual rental = ₱500,000
   DST per year = ₱6 for the first ₱2,000 + ₱2 × 498 (each additional ₱1,000) = ₱1,002
   Total DST = ₱1,002 × 3 years = ₱3,006
   

   Result: ABC Corporation pays ₱3,006 in DST on the lease, computed for each year of the term and paid once when the lease is executed.

4. Example 4

   Insured Filipina, age 35, buys a life insurance policy with an amount of insurance of ₱2,000,000 and an annual premium of ₱200,000 from Philam Life.

   Amount of insurance = ₱2,000,000 (over ₱1,000,000)
   DST under NIRC §183 for this bracket = ₱200, one time
   DST liability = ₱200
   

   Result: A one-time DST of ₱200 is due. Life insurance DST is based on the amount of insurance, not the premium, and policies of ₱100,000 or less are exempt.

5. Example 5

   Gonzales & Co. executes a power of attorney document authorizing a representative to manage their business affairs.

   Document type = Power of Attorney
   DST rate = Fixed amount of ₱10 per document per NIRC §193
   Calculation: ₱10 (flat rate)
   

   Result: Gonzales & Co. must pay ₱10 in DST on the power of attorney document, regardless of the value of assets or transactions covered.

Common mistakes to avoid

• Presenting an unstamped deed or contract to the Registry of Deeds or in court, assuming DST can be settled later.

  Penalty:

  The document cannot be recorded or used in evidence until the DST is paid (NIRC §201). The late DST also carries a 25% surcharge and 12% annual interest; on ₱10,000 of DST that is ₱2,500 plus ₱1,200 a year.

  How to avoid it:

  File BIR Form 2000-OT and pay the DST within five days after the close of the month the document was signed. Keep the return and proof of payment with the document.

• Calculating DST on the wrong base amount. For example, calculating DST on the down payment instead of the total selling price in a real estate transaction, or on the interest portion instead of the principal in a loan agreement.

  Penalty:

  Underpayment of DST results in a 25% surcharge plus 12% annual interest on the shortfall. For a ₱5,000 underpayment, the total penalty is ₱1,250 plus ₱600 annual interest.

  How to avoid it:

  Use the full base for each document type. For real property, use the higher of the price or fair market value (zonal or assessed value); for loans, the issue price; for leases, the rent for each year of the term. Review NIRC §174 to §198 for the base of each document.

• Waiting until notarization or registration to deal with DST, and missing the filing deadline.

  Penalty:

  DST falls due within five days after the close of the month the document was signed, whether or not it has been notarized or registered. Paying later adds the 25% surcharge and 12% annual interest.

  How to avoid it:

  Diary the signing date and pay the DST through Form 2000-OT or Form 2000 before the deadline. Keep proof of payment (eFPS confirmation or bank-validated return) with the document.

• Overlooking DST on lease renewals or amendments. Taxpayers often assume that if DST was paid on the original lease, no additional DST is due on renewals or amendments.

  Penalty:

  The renewal or continuance of a contract, and the assignment of a lease, is taxed at the same rate as the original instrument (NIRC §198). Failure to pay DST on the renewal results in assessment of DST on the renewed term plus penalties.

  How to avoid it:

  Treat each lease renewal or assignment as a separate taxable document. Calculate and pay DST on the renewed term. Document all DST payments for audit purposes.

• Claiming exemptions without proper documentation. Some taxpayers claim that their documents are exempt (e.g., government documents, charitable institution documents) without obtaining exemption certificates or supporting evidence from the BIR.

  Penalty:

  The BIR may disallow claimed exemptions and assess DST plus penalties. Burden of proof lies with the taxpayer to demonstrate exemption eligibility. When one party is exempt, the other party still owes the tax (NIRC §173).

  How to avoid it:

  Keep the documents that show the exemption applies (registration certificates, BIR rulings, or the legal basis). When in doubt, pay DST and file a claim for refund with proper documentation.

Ways to lower the tax legally

• For short-term borrowing, match the loan term to the actual need. DST on debt instruments with a term under one year is prorated by days over 365 (NIRC §179).

  Potential savings: A ₱1,000,000 loan for 90 days pays ₱1,000,000 × 0.75% × 90/365 = ₱1,849.32 in DST, against ₱7,500 for a term of one year or more.

• Document the loan and its security together. Under CMEPA, only one DST is imposed on the loan agreement, promissory note, mortgage and other contracts securing the same loan (NIRC §179 as amended).

  Potential savings: On a ₱5,000,000 loan secured by a real estate mortgage, DST is ₱37,500 on the loan, with no separate mortgage DST of ₱20,020 (₱40 + 999 × ₱20 under NIRC §195).

• Sell listed shares through the stock exchange rather than by private transfer where possible. Dispositions of listed shares through a local or foreign exchange are exempt from DST (NIRC §199(e) as amended by CMEPA).

  Potential savings: A private transfer of shares with ₱1,000,000 par value pays ₱1.50 for each ₱200 of par, or ₱7,500 in DST under NIRC §175; the same shares sold through the exchange pay no DST.

• File and pay DST on time. The return is due within five days after the close of the month the document was signed, and the 25% surcharge applies from the first day late.

  Potential savings: On ₱37,500 of DST for a ₱2,500,000 house sale, paying on time avoids a ₱9,375 surcharge plus ₱4,500 a year in interest.

• Engage a tax professional to review all high-value documents before execution. Professional review can identify exemptions, proper document classification, and the correct tax base.

  Potential savings: On a ₱4,000,000 sale with a ₱5,000,000 zonal value, DST is ₱75,000, not ₱60,000. Catching the error before filing avoids a ₱15,000 deficiency plus a ₱3,750 surcharge and interest.