RR No. 10-2011 dated July 1, 2011 Exchange of Goods or Properties for Shares of Stocks

RR No. 10-2011 dated July 1, 2011

Exchange of Goods or Properties for Shares of Stocks

However, the exchange of goods or properties including the real estate properties used in business or held for sale or for lease by the transferor, for shares of stocks, whether resulting in corporate control or not, is subject to VAT."

Illustration: Abel Corporation (transferee) is a merchandising concern and has an inventory of goods for sale amounting to PhP1 Million. Nel Corporation (transferor), a real estate developer, exchanged its real properties for shares of stocks of Abel Corporation resulting in the acquisition of corporate control. The inventory of goods owned by Abel Corporation is not subject to output tax despite the change in corporate control because the same corporation still owns them. This is in recognition of the separate and distinct personality of the corporation from its stockholders. However, the stocks of Abe! Corporation, whether resulting in corporate control or not, is subject to VAT.