October 8, 2020
Philippines amends fair market value definition for unlisted shares of stock
The Philippine Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 20-20201 amending the definition of fair market value (FMV) of shares of stock not listed and traded on the Philippine stock exchange. The regulation became effective from 3 September 2020.
The FMV of shares of stock not listed and traded on the Philippine stock exchange is as follows:
The Adjusted Net Asset Value Method, which required that all assets and liabilities of the company whose shares were being transferred be adjusted to FMV, no longer applies. Multinational companies contemplating the transfer of unlisted shares of stock in a Philippine corporation pursuant to any merger or acquisition, and corporate restructuring, among others, should consider the impact of the new definition of FMV as it applies to common and preferred shares of stock.
1 Issued on 17 August 2020. Full text of Revenue Memorandum Circular No. 83-2020 is available at the BIR website.
2 Increase in the value of property usually determined by an independent appraiser.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Philippines (SGV & Co.), Makati City
Ernst & Young LLP, Philippines Tax Desk, New York
Ernst & Young LLP, Asia Pacific Business Group, New York
PDF version of this Tax Alert