BIR simplifies nominee transfers of club shares

The Bureau of Internal Revenue has clarified the tax treatment of nominee transfers of proprietary club shares and removed the requirement for qualified transactions to secure a prior confirmatory ruling.

The clarification is contained in Revenue Memorandum Circular No. 72-2026, dated June 30, 2026.

The circular covers proprietary club shares that are beneficially owned by corporations but registered under the names of corporate officers or other individuals acting only as nominees or trustees.

The BIR said the arrangement is consistent with club membership rules that require registration in the name of a natural person.

Under the circular, the transfer of title to a proprietary club share from one nominee to another is not considered a sale, exchange, or donation if beneficial ownership remains with the corporation.

As a result, the transaction is not subject to Capital Gains Tax, Documentary Stamp Tax, or Donor’s Tax.

BIR Commissioner Charlito Martin R. Mendoza said the issuance is part of the bureau’s continuing efforts under BIR DARES to simplify processes and make tax administration more taxpayer-focused.

“Clearer rules lead to more efficient tax administration and greater peace of mind for taxpayers. 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. This is another step toward making BIR processes simpler, more predictable, and easier to navigate,” Commissioner Mendoza said.

The streamlined treatment applies only when the corporation remains the beneficial owner of the proprietary club share.

It also applies only when the nominee holds legal title under a Declaration of Trust or Trust Agreement.

The proprietary club share must also be recorded as a corporate asset.

No monetary or non-monetary consideration must be given to either the outgoing nominee or the incoming nominee.

The required supporting documents must also be submitted.

The BIR said pending requests for confirmatory rulings covering these transactions will no longer be acted upon.

Taxpayers may instead proceed directly to the appropriate Revenue District Office to process the electronic Certificate Authorizing Registration, or eCAR.

The move is expected to reduce paperwork and waiting time for corporations that hold proprietary club shares through nominees because of club registration rules.

It also shifts the compliance check from a prior ruling system to documentary review and post-audit verification.

“Simplifying a process does not mean relaxing compliance. We are making it easier for taxpayers to complete legitimate transactions without compromising the integrity of tax administration. The Bureau will continue to ensure compliance through documentary requirements and post-audit verification,” Commissioner Mendoza said.

The circular provides certainty for companies that transfer proprietary club shares between nominees because of changes in officers, trustees, or authorized representatives, provided there is no change in the corporation’s beneficial ownership.

The BIR said the policy balances ease of doing business with continued safeguards against improper tax avoidance.