Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 57-91)
The correct time of payment of documentary stamp tax on deeds of sale is at the time the act is done or transaction had, meaning the date of execution or signing of the document by the parties, and not at the time of its notarization.
Taxpayers must purchase, affix, and subsequently cancel documentary stamps or make a notation of payment of documentary stamp tax with a denomination of P10.00 or more on the documents at the time of execution or signing.
Any delay in the purchase and affixture/notion of documentary stamp payment shall render the deed subject to statutory penalties of 25% surcharge plus 20% interest per annum as prescribed by Sections 248 and 249 of the Tax Code as amended.
Yes. Penalties may be abated if the taxpayer proves by clear and convincing evidence, other than the deed itself, that the delay was due to a reasonable and justifiable cause such as non-working holidays, strong typhoons, or natural calamities that closed BIR offices making it impossible to purchase stamps.
The Commissioner of Internal Revenue has the power to abate penalties pursuant to Section 204 of the Tax Code as amended.
Section 173 in relation to Section 196 of the Tax Code as amended govern the payment of documentary stamp tax on deeds of sale.
The prescribed penalties are a 25% surcharge and an additional 20% interest per annum under Sections 248 and 249 of the Tax Code as amended.
The date of notarization is not relevant; payment must be made on the date of execution or signing of the document, not at the time of notarization.
It involves making a notation on the document indicating that documentary stamp tax has been paid, with a denomination of P10.00 or more, in lieu of affixture of physical stamps.
They are enjoined to be guided accordingly by this Circular and to give it as wide publicity as possible to ensure proper compliance.