Wednesday, April 6, 2011

Tax Season: Are mutual fund, UITF, or stock trading gains taxable?

It's that time of the year again. Tax season! Hooray! Don't forget to file your tax returns, you don't want to be slapped with penalties by the BIR. Quarterly income tax for the first quarter of 2011 and annual income tax for 2010 are due on April 15. For other tax deadlines check my Squidoo page: BIR deadlines.

Are gains from mutual funds, UITFs, or stock trading taxable? It is my understanding that gains from any of these need not be declared and are not taxed.

On the BIR website it lists "gain from redemption of shares in mutual fund" as excluded from gross income. Check here. Search the page for "mutual fund".

Several documents online also argue that UITF redemptions are already subject to final withholding tax, therefore the investor need not pay any more taxes. Check with your bank if they do withhold the necessary taxes.

Buying and selling of shares on the PSE are taxed 0.005% per transaction. Selling shares are taxed an additional 0.005% sales tax. Broker's commissions are taxed with 12% VAT. All these are already factored in when trading on the PSE. As far as I can tell there are no other taxes required to be paid.
Trading shares off the PSE are taxed 5% on transactions up to P100,000. Amounts in excess of P100,000 are taxed 10%.

Disclaimer: I am not a lawyer nor an accountant. I do my best to ensure that I present complete and accurate information, but it is up to the reader to evaluate and confirm that information. In addition tax laws and regulations may change. This blog is not a replacement for legal or accounting advice.

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