Subject Code: BABUSTAX

Subject Title: Business and Transfer Taxes

Topic: Module 11: Documentary Stamp Tax

a. Documentary stamp tax
b. Transactions subject to documentary stamp tax
c. DST on original issuance of shares
d. DST on transfer of shares
e. All debt instruments
f. DST on life insurance
g. Transactions exempt from DST
h. Electronic documents
i. Loan transactions with security
j. Repurchase agreement
k. Letter of credit
l. Mode of payment and/or remittance of DST
m. Effect of failure to stamp taxable document
n. Accounting for documentary stamp tax

MODULE 11:
DOCUMENTARY STAMP TAX
I. Pre-test / Activity
1. In a deed of absolute sale of real property, who is statutorily liable to pay the documentary
stamp tax?
A. The seller
B. The buyer
C. The seller or the buyer
D. The seller and the buyer, separately

2. Which of the following is true regarding electronic documents?

A. Electronic documents are subject to DST at the same rate as the physical documents.
B. Electronic documents are not subject to DST.
C. Electronic documents will only become subject to DST once it has been executed in
physical form.
D. Electronic documents, by virtue of their ephemerality, is subject to DST at double
the rate imposed on physical documents.

II. Learning Outcomes

At the end of the topic the students should be able to:
 Discuss the concept of documentary stamp tax
 Determine the taxable transactions, tax bases and tax rates
 Compute the amount of documentary stamp tax

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III. Content
A. DOCUMENTARY STAMP TAX
Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers
evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident
thereto.

Person Liable
It is imposed against the person making, signing, issuing, accepting or transferring the document
or facility evidencing the transactions. Thus, in general, it may be imposed on the transaction
itself or upon the document underlying such act. Any of the parties thereto shall be liable for
the full amount of the tax due. As between themselves, the said parties may agree on who shall
be liable or how they may share on the cost of the tax.

If one party is exempt from DST

Whenever one of the parties to the taxable transaction is exempt from the DST, the other party
thereto, who is not exempt shall be the one directly liable for the tax.

B. TRANSACTIONS SUBJECT TO DOCUMENTARY STAMP TAX

Tax Document Taxable Unit Tax Due Per % of Taxable Base
Code Unit Unit
Section

174 Original Issue of ₱200.00 or fraction 2.00 1% Par value of shares

Shares of Stock with thereof of stocks
par value

Original Issue of ₱200.00 or fraction thereof 2.00 1% Actual consideration

Shares of Stock for the issuance of
without par value shares of stocks

Stock Dividend ₱200.00 or fraction thereof 2.00 1% Actual value

represented by each
share
175 Sales, Agreements to ₱200.00 or fraction 1.50 0.75% Par value of such
Sell, Memoranda of thereof stock
Sales, Deliveries
or Transfer of Shares
or Certificates of
Stock

Stock without par 50% DST paid upon the

value original issuance of
said stock.
176 Bonds, Debentures, ₱200.00 or fraction thereof 0.75 0.375% Par value of such
Certificate of Stock bonds, debentures,
or Indebtedness Certificate of Stock
issued in foreign or Indebtedness
Countries

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177 Certificate of Profits ₱200.00 or fraction thereof 1.00 0.5% Face value of such
or Interest in certificates /
Property or memorandum
Accumulation
178 Bank Checks, On each Document 3.00
Drafts, Certificate of
Deposit not bearing
interest and other
Instruments
179 All Debt Instruments ₱200.00 or fraction thereof 1.50 0.75% Issue price of any
such debt
instruments or a
fraction of 365 days
for instrument with
term of less than 1
year
180 All Bills of ₱200.00 or fraction thereof 0.60 0.3% Face value of any
Exchange or Drafts such bill of
exchange or draft
181 Acceptance of Bills ₱200.00 or fraction thereof 0.60 0.3% Face value of such
of Exchange bill of exchange or
or order for the order or the
payment of money Philippine
purporting to be equivalent of such
drawn in a foreign value, if expressed
country but payable in foreign currency
in the Philippines
182 Foreign Bills of ₱200.00 or fraction thereof 0.60 0.3% Face value of such
Exchange and bill of exchange or
Letters of Credit letter of credit or the
Philippine
equivalent of such
value, if expressed
in foreign currency
183 Life Insurance If the amount of insurance exempt Amount of
Policies does not exceed ₱100,000 Insurance

If the amount of insurance 20.00 Amount of

exceeds ₱100,000 but does Insurance
not exceed ₱300,000

If the amount of insurance 50.00 Amount of

exceeds ₱300,000 but does Insurance
not exceed ₱500,000

If the amount of insurance 100.00 Amount of

exceeds ₱500,000 but does Insurance
not exceed ₱750,000

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 If the amount of insurance 150.00 Amount of
exceeds ₱750,000 but does Insurance
not exceed ₱1,000,000

If the amount of insurance 200.00 Amount of

exceeds ₱1,000,000 Insurance
184 Policies Of ₱4.00 premium or fraction 0.50 12.5% Premium charged
Insurance upon thereof
Property
185 Fidelity Bonds and ₱4.00 premium or fraction 0.50 12.5% Premium charged
other Insurance thereof
Policies
186 Policies of ₱200.00 or fraction thereof 1.00 0.5% Premium or
Annuities or other installment payment
instruments or contract price
collected

Pre-Need Plans ₱200.00 or fraction thereof 0.40 0.20% Premium or

contribution
collected
187 Indemnity Bonds ₱4.00 or fraction thereof 0.30 7.5% Premium charged
188 Certificates of Each Certificate 30.00
Damage or
otherwise and
Certificate or
document issued by
any customs
officers, marine
surveyor, notary
public and certificate
required by law or
by rules and
regulations of a
public office
189 Warehouse Receipts Each Receipt 30.00
(except if value does
not exceed ₱200.00)
190 Jai-alai, Horse Race ₱1.00 and below cost of 0.20 20% Cost of the ticket
Tickets, lotto or ticket
Other Authorized
Number Games Cost of the ticket
Additional ₱0.20 on every
₱1.00 or fraction thereof if
cost of ticket exceeds ₱1.00
191 Bills of Lading or If the value of such goods 2.00 Value of such goods
Receipts(except exceeds ₱100 and does not
charter party) exceed ₱1,000

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 If the value exceeds ₱1,000 20.00 Value of such goods

Freight tickets covering Exempt

goods, merchandise or effects
carried as accompanied
baggage of passengers on
land and water carriers
primarily engaged in the
transportation of passengers
192 Proxies (except Each proxy 30.00
proxies issued
affecting the affairs
of associations
or corporations,
organized for
religious, charitable
or literary purposes)
193 Powers of Attorney Each Document 10.00
(except acts
connected with the
collection of claims
due from or accruing
to the Government
of the Republic of
the Philippines, or
the government of
any province, city or
Municipality)
194 Leases and other First 2,000 or fractional part 6.00 0.3%
Hiring agreements or thereof
memorandum or
contract for hire, use
or rent of any lands For every ₱1,000 or fractional 2.00 0.2%
or tenements or part thereof in excess of
portions thereof the first ₱2,000 for each
year of the term of the said
contract or agreement
195 Mortgage or Pledge First 5,000 40.00 0.8% Amount Secured
of lands, estate, or
property and Deeds On each ₱5,000 or fractional 20.00 0.4% Amount Secured
of Trust part thereof in excess of
5,000
196 Deed of Sale, First 1,000 15.00 1.5% Consideration or
Conveyances, Fair Market Value,
Donations of whichever is higher
Real Property (if government is a
(except grants, party, basis shall be
patents or original the consideration)

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 certificate of
adjudication issued For each additional ₱1,000 or 15.00 1.5% Consideration or
by the government) fractional part thereof in Fair Market Value,
excess of ₱1,000 whichever is higher
(if government is a
party, basis shall be
the consideration)
197 Charter parties and Charter parties and similar
Similar Instruments instruments if gross tonnage
of the ship, vessel or steamer
is:

1st 6 months Registered gross

1,000 tons and below ₱1,000 tonnage
In excess +
₱100

1st 6 months Registered gross

1,001 to 10,000 tons ₱2,000 tonnage
In excess +
₱200

1st 6 months Registered gross

Over 10,000 tons ₱3,000 tonnage
In excess +
₱300
198 Stamp Tax on At the same
Assignments and rate as that
Renewals or imposed on
Continuance of the original
Certain Instruments instrument.

C. DST ON ORIGINAL ISSUANCE OF SHARES

It is imposed on the privilege of issuing shares of stock. The shares are considered issued upon
the acquisition of the stockholder of the attributes of ownership over the shares (the right to vote,
the right to receive dividends, the right to dispose, etc., notwithstanding the restrictions on the
exercise of any of these rights may be imposed by the Corporation's articles and by-laws, the
SEC, stockholder agreement, court order, etc.) which acquisition of such attributes of ownership
shall be manifested by the acceptance by the Corporation of the stockholder's subscription to its
shares of stock.

The entire shares of stock subscribed are considered issued for the purpose of the DST, even if
not fully paid. The delivery of the certificates of stock to stockholders is not essential for the DST
to accrue.

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 Illustration
An investor wishes to invest in a domestic company registered here in the Philippines. The
investor will be purchasing the shares as an original issuance from the Philippine entity, not from
an existing shareholder. The investor wishes to purchase 100,000 shares of stock in the Philippine
entity at their par value of ₱100 per share.

Original issuance of stock (100,000 x ₱100) ₱10,000,000

Divide by………………………………………............. / ₱200
50,000
Multiply by……………………………………............ x ₱2
DST……………………………………………............... ₱100,000

D. DST ON TRANSFER OF SHARES

All transfers of shares of stock are subject to DST upon execution of the deed transferring
ownership or rights thereto, or upon delivery, assignment or indorsement of such shares in favor
of another. No transfer of shares stock shall be recorded unless the DST thereon has been duly
paid for.

Actual or constructive transfer necessary

For a sale or exchange to be taxable there must be an actual or constructive transfer of beneficial
ownership of the shares of stock from person to another. Such transfer may be manifested by the
clear exercise of attributes of ownership over such stocks by the transferee, or by an actual entry
of a change in the name appearing in the certificate of stock or in the Stock and Transfer Book
of the issuing corporation or by any entry indicating transfer of beneficial ownership in any form
of registry including those of a duly authorized scripless registry, such as those maintained by
the PSE.

Transfer to new trustee-exempt

If by the transfer of certificates of stock from a resigned trustee to a newly appointed trustee such
certificate of stock remains in the name of the cestui que trust or the resigned trustee so that the
new trustee is constituted as mere depository of the stock such transfer is not taxable.

Transfer of shares to "nominees-exempt

Transfer of shares to "nominees qualify them to sit in the board or to qualify them to perform any
act in duly relation to the corporation shall not be subject to DST upon proof of a duly executed
Nominee Agreement showing the purpose of the transfer; that the transfer is without
consideration other than the undertaking of the nominee to only represent the beneficial owner
of the stock; and the transfer is in trust.

Agreements to sell shares of stock- taxable

Agreements to sell shares of stock are also subject to DST. It is not only actual sales or transfers
that are taxable, but also agreements to sell such stock or executory contracts for the sale or
transfer of shares of stock. However, if the DST has been paid on the agreement to sell or
memoranda of sale, the actual sale or transfer of the stocks pursuant to the agreement will no
longer be subject to DST.

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E. ALL DEBT INSTRUMENTS
Representing borrowing and lending transactions are now covered and subject to DST.
"Debentures and certificates of indebtedness" and "due bills and certificates of obligation" used
to be found under separate provisions are now incorporated under this classification and rate.

"Debt Instrument" shall mean instruments representing borrowing and lending transactions
including but not limited to:
a. Debentures
b. Certificates of Indebtedness
c. Due Bills
d. Bonds
e. Loan Agreements, including those signed abroad wherein the object of the contract is
located or used in the Philippines
f. Instruments and Securities issued by the Government or any of its instrumentalities
g. Deposit Substitute Debt Instruments
h. Certificates or Other Evidence of Deposits that are drawing interest significantly higher
than the regular savings deposit taking into consideration the size of the deposit and the
risks involved
i. Certificates or Other Evidence of Deposits that are drawing interest and having a specific
maturity date
j. Orders for payment of any sum of money otherwise than at sight or on demand
k. Promissory Notes, whether negotiable or non-negotiable, except bank notes issued for
circulation.
Sale of Debt Instruments in the Secondary Market –exempt
The DST on debt instruments shall be imposed only on every original issue and the tax shall be
based on the issue price thereof. Hence, sale of debt instruments in the secondary market will not
be subject to the DST.
Computation of DST
1. If the term of the debt instrument is less than 1 year, the DST shall be computed taking
into consideration the number of days that the instrument is outstanding as a fraction of
365 days.
Illustration
In 2021, a promissory note in the amount of ₱100,000 issued with a term of 90 days. What
is the amount of the documentary stamp tax?
Promissory note ……………………… ₱100,000
Divide by…………………………….. / ₱200
500
Multiply by…………………………… x ₱1.50
₱750
Multiply and divide by………………. x 90/365
DST……………………………………….. ₱185

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 2. If the term is 1 year or longer, the DST due shall be computed based on the issue price of
the debt instrument.
Illustration
In 2021, a promissory note in the amount of ₱100,000 is issued with a term of 2 years.
What is the amount of the documentary stamp tax?
Promissory note ……………………… ₱100,000
Divide by…………………………….. / ₱200
500
Multiply by…………………………… x ₱1.50
DST……………………………………….. ₱750

Deposits subject to DST

1. Those with a fixed or a specific maturity date (e.g. time deposits) or the interest varies
depending on the duration/term (number of days) of the deposit, irrespective of the
nomenclature and whether covered by a certificate, passbook or any other evidence of
deposit.
2. Those that provide interest significantly higher than the rate given to a regular
savings/demand deposit account.
3. Those with a higher interest yield than that given to savings deposit or where the interest
rate earned by such deposit is reduced upon termination.

"Significantly Higher" connotes that the interest rate is at least 50% higher than the lowest
interest rate given by the bank or financial institution on any of its deposit, whether the
same be savings/demand deposit.

Deposits not subject to DST

Regular or ordinary demand and savings deposits which are withdrawable upon demand by the
depositor AND earning rates of interest based on prevailing market rates, irrespective of the
amount deposited.

F. DST ON LIFE INSURANCE

The DST on life insurance policies shall be due and collected every time there is an insurance
premium collection on such policy, including premiums paid/collected beyond the year the policy
was take out.

“Insurance Premium Collection" shall include not only those premiums paid or remitted by the
insured directly but shall also include premiums paid for by applying cash surrender value,
dividend earned, other modes of payment, or whether on the original policy or amendments
thereto.

Increase in coverage from year to year or additional riders attached to existing policy shall be
deemed a new issuance and premiums relating thereto whether paid or remitted are subject to
DST.

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G. TRANSACTIONS EXEMPT FROM DST
a. Policies of insurance or annuities made or granted by a fraternal or beneficiary society,
order, association or cooperative company, operated on the lodge system or local
cooperation plan and organized and conducted solely by the members thereof for the
exclusive benefit of each member and not for profit.
b. Certificates of oaths administered to any government official in his official capacity or
of acknowledgment by any government official in the performance of his official duties,
written appearance in any court by any government official, in his official capacity;
certificates of the administration of oaths to any person as to the authenticity of any paper
required to be filed in court by any person or party thereto, whether the proceedings be
civil or criminal; papers and documents filed in courts by or for the national, provincial,
city or municipal governments; affidavits of poor persons for the purpose of proving
poverty; Statements and other compulsory information required of persons or
Corporations by the rules and regulations of the national, provincial, city or municipal
governments exclusively for statistical purposes and which are wholly for the use of the
bureau or office in which they are filed, and not at the instance or for the use or benefit of
the person filing them; certified copies and other certificates placed upon do upon
documents, instruments and papers for the national, provincial, city or municipal
governments, made at the instance and for the sole use of some other branch of the
national, provincial, city or municipal governments and certificates of the assessed value
of lands, not exceeding Two hundred pesos (₱200) in value assessed, furnished by the
provincial, city or municipal Treasurer to applicants for registration of title to land.
c. Borrowing and lending of securities executed under the Securities Borrowing and
Lending Program of a registered exchange or accordance with regulations prescribed by
the appropriate regulatory authority: Provided, however, That any borrowing or lending of
securities agreement as contemplated hereof shall be duly covered be master securities
borrowing and lending agreement acceptable to the appropriate regulatory authority, and
which agreement is duly registered and approved by the Bureau of Internal Revenue (BIR).
d. Loan agreements or promissory notes, the aggregate of which does not exceed Two
hundred fifty thousand pesos (₱250,000), or any such amount as may be determined by
the Secretary of Finance, executed by an individual for his purchase on installment for his
personal use or that of his family and not for business or resale, barter or hire of a house,
lot, motor vehicle, appliance or furniture: Provided, however, That the amount to be set by
the Secretary of Finance shall be in accordance with a relevant price index but not to exceed
ten percent (10%) of the current amount and shall remain in force at least for three (3)
years.
e. Sale, barter or exchange of shares of stock listed and traded through the local stock
exchange.
f. Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or
continuance of any agreement, contract, charter, or any evidence of obligation or
indebtedness, if there is no change in the maturity date or remaining period of coverage
from that of the original instrument.
g. Fixed income and other securities traded in the secondary market or through an exchange.

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 h. Derivatives, repurchase agreements and reverse repurchase agreements shall be
treated similarly as derivatives
Derivatives exempted from DST shall refer only to those derivatives issued by entities duly
licensed by the BSP to issue and trade in derivatives, and whose issuance is duly authorized
by the BSP.
i. Interbranch or interdepartmental advances within the same legal entity.
j. All forbearance arising from sales or service contracts including credit card and trade
receivables: Provided, that the exemption be limited to those executed by the seller ort
service provider itself.
k. Bank deposit accounts without a fixed term or maturity.
l. All contracts, deeds, documents and transactions related to the conduct of business of the
Bangko Sentral ng Pilipinas.
m. Transfer of property pursuant to Section 40(c)(2) of the Tax Code.
Section 40(C2) of the Tax Code refers to exempt transfers of real property in exchange for
shares of stock resulting in control. Note, however, that the issuance of shares in exchange
for such real property is subject to the DST on original issuance of shares.
n. Interbank call loans with maturity of not more than seven (7) days to cover deficiency in
reserves against deposit liabilities, including those between or among banks and quasi-
banks.
The purpose of the loan must be strictly to cover the deficiency in reserves against deposit
liabilities for the exemption to apply. If the purpose is otherwise, the same shall be subject
to the DST on debt instruments

H. ELECTRONIC DOCUMENTS
Electronic documents are likewise subject to the DST where no exemption, as mentioned above,
applies. Note that under the Electronic Commerce Act, electronic documents are the functional
equivalent of a written document under existing laws and the issuance thereof is tantamount to
the issuance of a written document and therefor subject to DST.

I. LOAN TRANSACTIONS WITH SECURITY

Note that Section 179 of the Tax de provide that only one DST shall be imposed on either loan
agreement or promissory note issued to secure such loan, whichever is higher.

Sec. 8 of RR No. 9-1994 provides that where only one instrument was prepared, made, signed
and executed to cover a loan agreement/promissory note, pledge/mortgage, the DST shall be paid
and computed in the full amount of the loan or credit granted. In this regard, the instrument shall
be treated as covering only one taxable transaction, subject to the higher DST.

J. REPURCHASE AGREEMENT
A repurchase agreement is where the seller would sell securities with an agreement that he would
purchase back the security at a fixed price on a fixed future date. Note that this transaction is

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 considered exempt from DST, since it is really a form of financing and not an actual sale of
securities.
However, the BIR has deemed the transaction as consisting of two components, the repurchase
agreement itself and a pledge. Accordingly, the BIR deems the pledge not covered by the
exemption and therefor subject to DST.

K. LETTER OF CREDIT
A letter of credit (LC) is a contract by and between a Local Bank and its Correspondent Bank in
a foreign country. The LC is opened by the Local Bank in favor of a Client/Importer who has a
credit line; through the LC, the Local Bank orders its Correspondent Bank to pay the Supplier of
Goods in the foreign country, upon presentation of proof that the goods have been laden on board
a vessel or an aircraft, and the title over the goods s legally transferred to the Local Bank, pursuant
to the shipping agreement. After which, the Client/Importer would issue a Trust Receipt as
security for the payment of the amount advanced by the Bank.
However, in RMC No. 51-2010, the BIR imposed a separate DST on the trust receipt.

L. MODE OF PAYMENT AND/OR REMITTANCE OF DST

In general, the DST return shall be filed five (5) days after the close of the month when the
taxable document was made, signed, issued, accepted or transferred and the tax thereon shall be
paid at the same time the return is filed.
Tax Forms
BIR Form 2000 Monthly Documentary Stamp Tax Declaration/Return;
BIR Form 2000-OT Documentary Stamp Tax Declaration/Return (One-Time Transactions)
Where:
Authorized Agent Banks within the territorial jurisdiction of the RDO over the residence or
principal place of business of the taxpayer.
Exception:
The tax may be paid either through:
1. Purchase and actual affixture, or
2. By imprinting the stamps through a DST metering machine.
Documentary Requirements
Mandatory
1. Photocopy of the document to which the documentary stamp shall be affixed
2. Proof of exemption under special laws, if applicable;
3. Proof of payment of documentary stamp tax paid upon the original issue of the stock, if
applicable.
Online Electronic DST Imprinting Machine
Unless expressly exempted by the Commissioner on meritorious grounds, the following class of
taxpayers shall use the "on-line electronic DST imprinting machine" in the payment and
remittance of their documentary stamp taxes:
1. Bank, a quasi-bank or a non-bank financial intermediary, a finance Company, or an
insurance, a surety, a fidelity, or annuity company;
2. Shipping and airline companies;

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 3. Pre-need company on sale of pre-need plans
4. Educational institution in respect of issuance of taxable certificates (e.g., Diploma,
Transcript of Records, and other documents taxable as certificates)
5. Such other industries as may be required by the Commissioner to use the "on-line electronic
DST imprinting machine"

For eDST System User

Prior to the enrollment in the eDST System, taxpayers availing thereof, whether on the mandatory
or optional basis, shall be duly enrolled under the BIR Electronic Filing and Payment System
(eFPS). In paying the DST liabilities, BIR Form No. 2000 shall be filed and the amount due
thereon shall be paid thru the eFPS for taxpayers and PhilPass Facility of the Bangko Sentral ng
Pilipinas for banks (AABs and non-AABs).

M. EFFECT OF FAILURE TO STAMP TAXABLE DOCUMENT

An instrument, document or paper which is required by law to be stamped and which has been
signed, issued, accepted or transferred without being duly stamped:
1. Shall not be recorded
2. Nor shall it or any copy thereof or any record of transfer of the same be admitted or used
in evidence in any court
3. No notary public or other officer authorized to administer oaths shall add his jurat or
acknowledgment to any document subject to DST unless the proper documentary stamps
are affixed thereto and cancelled.

N. ACCOUNTING FOR DOCUMENTARY STAMP TAX

Illustration
JKL Company sold a real property for consideration amounting to ₱5,800,000. The deed of sale
in this transaction is a taxable document. JKL should file and pay documentary stamp tax
amounting to ______.

Taxable Unit Tax Due P/Unit Tax Due

First ₱1,000 ₱1,000 ₱15 ₱ 15
Excess ₱1,000 ₱5,799,000/1,000 ₱5,799 ₱15 ₱86,985
Total ₱87,000

Upon filing and payment of the DST, JKL Company would record the transaction in its books
as:
Account Titles Debit Credit
Documentary Stamp Tax 87,000
Cash 87,000

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