Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

October 7, 2020

Philippines amends fair market value definition for unlisted shares of stock

Executive summary

The Philippine Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 20-20201 amending the definition of fair market value (FMV) of shares of stock not listed and traded on the Philippine stock exchange. The regulation became effective from 3 September 2020.

Detailed discussion

The FMV of shares of stock not listed and traded on the Philippine stock exchange is as follows:

  1. For common shares of stock, the book value based on the latest available financial statements duly certified by an independent public accountant prior to the date of sale, but not earlier than the immediately preceding taxable year, shall be considered as the prima facie FMV.
  2. For preferred shares of stock, the liquidation value, being equal to the redemption price of the preferred shares as of the balance sheet date nearest to the transaction date (including any premium and cumulative preferred dividends in arrears), shall be considered as the FMV.
  3. If a corporation has both common and preferred shares, the book value per common share is computed by deducting the liquidation value of the preferred shares from the total equity of the corporation and dividing the result by the number of outstanding common shares as of the balance sheet date nearest to the transaction date.
  4. The book value of the common shares of stock or the liquidation value of the preferred shares of stock is not required to be adjusted to include any appraisal surplus2 from any property of the corporation not reflected or included in the latest audited financial statements when determining the FMV. The latest audited financial statements shall be sufficient in determining the FMV of the shares of stock subject of the sale, barter, exchange, or other disposition.



The Adjusted Net Asset Value Method, which required that all assets and liabilities of the company whose shares were being transferred be adjusted to FMV, no longer applies. Multinational companies contemplating the transfer of unlisted shares of stock in a Philippine corporation pursuant to any merger or acquisition, and corporate restructuring, among others, should consider the impact of the new definition of FMV as it applies to common and preferred shares of stock.


  1. Issued on 17 August 2020. Full text of Revenue Memorandum Circular No. 83-2020 is available at the BIR website.
  2. Increase in the value of property usually determined by an independent appraiser.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Philippines (SGV & Co.), Makati City
Ernst & Young LLP, Philippines Tax Desk, New York
Ernst & Young LLP, Asia Pacific Business Group, New York



The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more