BIR streamlines rules for club share transfers

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has scrapped the prior confirmatory ruling requirement for qualifying nominee transfers of proprietary club shares, saying the transactions are tax-exempt.

Proprietary club shares give corporations ownership interests and membership rights in private clubs for business purposes.

READ: BIR issues rules on higher stock transaction tax under TRAIN Law

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Many clubs require memberships to be registered under a natural person’s name, so corporations appoint officers or other individuals as nominees. A corporation carries out a nominee transfer when an officer retires or is replaced.

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Under Revenue Memorandum Circular (RMC) No. 72-2026, the BIR said it no longer requires a prior confirmatory ruling, particularly in cases where the corporation remains the beneficial owner.

A corporation may claim the exemption only if a Declaration of Trust or Trust Agreement covers the transfer, neither nominee receives consideration, and it records the share as a corporate asset.

The transfer does not incur Capital Gains Tax, Documentary Stamp Tax, or Donor’s Tax because it is neither a sale, an exchange, nor a donation.

The BIR said Capital Gains Tax applies only when beneficial ownership changes. A nominee transfer changes only the registered holder, not the beneficial owner, so it is not a sale or exchange.

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READ: Transfers of shares held in trust are not subject to tax

No transfer by donation

Likewise, the agency said the transfer is not a donation because the nominee never acquires beneficial ownership. It is therefore also exempt from Documentary Stamp Tax and Donor’s Tax.

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According to Charlie Mendoza, removing the confirmatory ruling requirement is part of the agency’s efforts to improve ease of doing business.

“By clarifying the proper tax treatment of these transactions and removing the need for a prior confirmatory ruling, we are reducing unnecessary administrative burden while ensuring that compliance continues to be verified through post-audit,” Mendoza said.

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“This is another step toward making BIR processes simpler, more predictable, and easier to navigate,” he added.