Transfers of legal title between nominee-trustees are exempt from capital gains tax (CGT), documentary stamp tax (DST), and donor’s tax, provided the corporation retains beneficial ownership and the transaction involves only a change in legal title, the Bureau of Internal Revenue (BIR) said.

This clarification, issued under Revenue Memorandum Circular (RMC) No. 72-2026, addresses a common corporate practice where firms purchase shares in organizations like the Manila Polo Club for their officers. Because these clubs often require ownership to be registered under the names of natural persons, corporations use "nominees" to hold the legal title while the company remains the actual owner.

BIR Commissioner Charlito Martin R. Mendoza noted in the RMC that “the transfer of legal title from one nominee-trustee to another shall not be subject to CGT,” based on the National Internal Revenue Code of 1997 (Tax Code).

Mendoza clarified that this exemption applies only when there is:

“...no sale, exchange, or other disposition involving the transfer of beneficial ownership, and the trustor-corporation remains to be the beneficial owner of the share, with the transfer constituting merely a change in legal title that does not alter the economic ownership, control, or enjoyment of the share.”

Regarding the DST exemption, the Bureau stated that nominee transfers qualify only if the trustor-corporation remains the beneficial owner. This aligns with the principle that DST is imposed exclusively on documents evidencing a transfer of ownership, rights, or the exercise of a taxable privilege.

Furthermore, the BIR noted that such transfers are exempt from donor’s tax because there is no intent to donate; the corporation retains beneficial ownership, and the nominee receives no economic benefit.

Mendoza said the issuance is part of the agency’s ongoing BIR DARES initiative, which aims to simplify processes, improve efficiency, and make services more taxpayer-friendly.

“Clearer rules lead to more efficient tax administration and greater peace of mind for taxpayers,” Mendoza said. “By clarifying the proper tax treatment of these transactions and removing the need for a prior confirmatory ruling, we are reducing unnecessary administrative burdens while ensuring that compliance continues to be verified through post-audit.”

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

Beyond these tax exemptions, the RMC introduces a major administrative shift to improve efficiency. To ease the burden of doing business, the BIR has removed the requirement to secure a prior confirmatory ruling for transferring proprietary club shares held under a nominee or trust arrangement.

Consequently, the BIR will no longer act on pending applications for confirmatory rulings for these specific transactions. "Taxpayers may instead proceed directly to the appropriate Revenue District Office to process the electronic Certificate Authorizing Registration (eCAR)," the BIR instructed.

However, the BIR emphasized that it will continue to monitor these transactions through post-audit verifications to ensure tax compliance and guard against tax avoidance.

“Any misrepresentation or failure to comply with the foregoing conditions shall subject the transaction to the applicable taxes, penalties, and surcharges under the Tax Code and existing revenue issuances, including possible recharacterization of the transaction based on its true nature,” the RMC stated.

Mendoza stressed that streamlining regulations does not mean relaxing compliance. “We are making it easier for taxpayers to complete legitimate transactions without compromising the integrity of tax administration,” he said, promising strict oversight through documentary requirements and post-audit verification.