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Tax On Investments

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Hi guys! Newbie here. I've read that I will be taxed in my investments. My question is, who will pay those taxes? Will my broker pay those taxes for me? Or I have to file them myself? Thanks for answering!

by lotski2 04/08/2020

Disclaimer: I'm not a lawyer, please consult someone who knows the law in detail. Below is based from my personal experience.

If your investment comes from a bank or a traditional investment instution then these institutions have been tasked by the BIR to collect or withhold your tax obligations for you in full. You don't need to pay taxes anymore because it has already been done for you. This is why people who have bank accounts do not file on their earnings every time their savings deposit incurs interest (imagine the trouble).

Examples of such transactions include trading in the stock market, buying insurance with investment from insurance companies, mutual funds from investment firms, UITF's, time deposit, and other products from the bank.

In our local stock market, taxes are imposed on the sale of securities, not on the capital gains (as in the case for US). Philippine securities sales tax is currently fixed at 0.60% (up from 0.50% two years ago) whether you gain or you lose on the transaction. There is ongoing discussion between the Dept of Finance and the law-making bodies to switch to capital gains tax.

Examples of transactions where tax is NOT fully (or even partially) witheld at source are investing in real-estate, buying and selling shares from a company that is not publicly listed, and other investment products that do not come from traditional banks or investment institutions.

Now, in terms of deducting these as expenses, I have no experience on that yet. but that's for a different topic.

I hope this helped!

by manny 04/15/2020 (Edited)

Thanks for the info!

by lotski2 04/12/2020
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