The CAR requirement on stock share transfer for shares not publicly traded

In order to transfer your shares of stock in a domestic stock corporation in the Philippines, you will need to secure a Certificate Authorizing Registration (CAR).

What is a CAR? Mandated by the National Internal Revenue Code (NIRC), the Certificate Authorizing Registration is a tax clearance document required by the Bureau of Internal Revenue (BIR). In essence, the CAR states that you have paid in full all of the taxes incurred in the sale, exchange, or barter of your shares of stock.

When is the CAR needed?

The Certificate Authorizing Registration applies to the transfer of shares of stocks that are not traded on the stock exchange. This certification is required by the BIR to prove that the transfer of your property was reported and that all necessary taxes were paid in full.

Anyone planning to sell their shares of stock must secure a CAR before the transfer is recorded in the books of the domestic corporation. If the seller, whether local or foreign, is unable to obtain a CAR by the time of the transfer, the activity will not be recognized. Even if you show receipts as proof of payment, the transfer will still not be recorded by the corporate secretary.

What are the requirements?

These are the mandatory requirements for the application of your CAR:

  • Your TIN number
  • Your stock certificate
  • Notarized Deed of Absolute Sale or the Document of Transfer
  • Proof of acquisition cost
  • Proof of payment of applicable taxes
  • Official Receipt or Deposit Slip
  • Fair market value of the shares of stocks
  • Certification fee of P100
  • Documentary Stamp Tax affixture of P15

There are additional requirements that you can also submit if they apply to you. These documents are:

  • Official receipts or invoices of the sale
  • AuditedFinancial Statements of the issuing corporation (for unlisted shares)
  • Appraisal report if the corporation has a real property recorded in its books

After gathering and completing the required documents, you can now submit them the nearest BIR office.

Learn more about owning and transferring shares of stock in the Philippines

For more information, get in touch with Duran & Duran-Schulze Law at info@duranschulze.com or (+632) 478 5826.