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Philippine Bourse Says Investors Avoiding Stocks on Tax Plan

Jan. 26 (Bloomberg) -- Investors are avoiding Philippine companies with public floats below the minimum required amid government plans to tax capital gains on the shares, Philippine Stock Exchange Inc. President Hans Sicat said.

“Some investors are staying away until this is cleared up,” Sicat told reporters in Manila today. “We favor that public float is maintained, but this should be done in a programmed manner.”

The Bureau of Internal Revenue plans to impose a 5 percent to 10 percent tax on capital gains on shares of public companies that don’t have the minimum portion of shares available for trading, the bourse said in a statement on its website Jan. 20, without stating the minimum. Shares are subject only to a stock transaction tax of 0.5 percent upon listing or execution of trades, the statement said.

“The market has been surprised by this order” from the bureau, Sicat said. The exchange will meet with regulatory and tax officials to discuss the matter, he said.

The Philippine Stock Exchange Index has dropped 6.4 percent this year after gaining 38 percent in 2010. San Miguel Corp., the nation’s largest food and drinks maker, said last month it plans to sell 1 billion shares this year to meet public float requirements.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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