Key Update on Stock Transaction Tax (STT) for Emperador Inc. Shares Traded on SGX-ST

Overview

Emperador Inc. (“EMI”), a major player in the global spirits industry, has released important updates regarding the collection, payment, and remittance of Stock Transaction Tax (STT) on shares traded on the Singapore Exchange Securities Trading Limited (SGX-ST). This article provides investors with an in-depth explanation of the new procedures, potential implications for trading, and issues that could impact the value and liquidity of EMI shares.

Key Points from the Report

• STT Rate Reduction: The STT rate imposed on sales of EMI shares traded on SGX-ST has been reduced from 0.6% to 0.1% of the gross selling price. This significant reduction follows the passage of Republic Act No. 122141, the Capital Markets Efficiency Promotion Act (CMEPA), and is effective from July 1, 2025.
• Final Tax Responsibility: STT is a final tax, payable by the seller. Singapore brokers are responsible for collecting and remitting the STT to the Philippines Bureau of Internal Revenue (BIR) on behalf of the sellers.
• Compliance Risk: Failure by shareholders or Singapore brokers to pay or remit the STT to the BIR may result in breaches of law and/or contract, exposing investors to legal and regulatory risks.
• Settlement Process: The STT is withheld by the Singapore broker at the date of settlement. Brokers may remit the STT via BDO Securities Corporation (“BDO”), EMI’s appointed Receiving Agent, or through other Philippine-affiliated brokers.
• List of Onboarded Brokers: A total of 17 Singapore brokers are currently onboarded with BDO as the Receiving Agent, including major names like CGS-CIMB, Citigroup, DBS Vickers, JP Morgan, UBS Securities, Tiger Brokers, and more.
• Contingency for Changes: If a broker’s arrangement with the Receiving Agent is terminated, or if BDO ceases to act as the agent, brokers are required to provide alternative payment methods and ensure continued compliance with STT regulations. Failure to do so may result in the inability of shareholders to trade EMI shares on SGX-ST.
• Potential Trading Restrictions: Until a broker arranges for an alternative STT payment method, shareholders using that broker may be unable to trade EMI shares on SGX-ST, which could directly impact share liquidity and price.
• Additional Fees: Investors should consult their brokers about any additional fees or charges related to STT payments, as these may vary and affect transaction costs.

Investor Considerations & Price Sensitivity

• Liquidity Risk: Any interruption in the STT payment mechanism could temporarily restrict trading of EMI shares on SGX-ST. Such disruptions may negatively affect liquidity and potentially lead to share price volatility.
• Cost of Trading: While the STT rate has been cut to 0.1%, investors must factor in any extra processing fees imposed by brokers, which could impact net returns.
• Legal & Regulatory Compliance: Investors face legal risks if STT is not properly collected or remitted, which could have reputational or financial consequences for both brokers and shareholders.
• Broker Dependency: The ability to trade EMI shares on SGX-ST depends on whether a broker has robust STT remittance arrangements. Investors are advised to confirm and monitor their broker’s compliance and service status.

Actionable Advice for Shareholders

• Check Broker Arrangements: Confirm that your Singapore broker is onboarded with BDO or has an alternative compliant STT remittance process.
• Monitor for Service Changes: Be aware of any announcements from your broker regarding changes to their STT payment arrangement, as these could affect your ability to buy or sell EMI shares.
• Consult Advisors: Seek professional advice on tax, legal, and trading implications, especially if you are a frequent trader or hold substantial EMI positions on SGX-ST.
• Review Costs: Clarify all applicable fees and charges related to STT payment with your broker to avoid surprises.

Conclusion

The reduction in STT rate is a positive development for cost-conscious investors; however, the risks related to broker compliance and potential trading disruptions are material and could impact share price and liquidity. Investors are urged to stay vigilant and proactive to safeguard their interests in EMI shares traded on SGX-ST.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, an offer, or solicitation to buy or sell securities. Investors should consult their own professional advisers regarding the tax, legal, and financial implications of trading Emperador Inc. shares on SGX-ST.