Question & AnswerQ&A (BIR REVENUE MEMORANDUM ORDER NO. 18-2009)
The main objective is to dispense with the necessity of securing a prior BIR ruling for the issuance of Certificate Authorizing Registration (CAR) / Tax Clearance (TCL) on the conveyance of land and common areas from the real estate developer to the Condominium Corporation under Republic Act No. 4726, thereby streamlining the process and improving taxpayer service.
The order dispensed with the requirement of securing a prior BIR ruling before the issuance of CAR/TCL for the transfer of land and common areas by the real estate developer to the Condominium Corporation.
Yes, taxpayers may still opt to secure a prior ruling from the Bureau to confirm the tax-exempt status of such transfer.
Republic Act No. 4726, also known as the Condominium Act, governs the organization and management of Condominium Corporations for holding title to and managing the land and common areas of a condominium project for the benefit of the unit owners.
The transfer is tax-exempt as no taxable income or creditable withholding tax arises since the deed of conveyance is without consideration. It is exempt from Documentary Stamp Tax under Sec. 196 and VAT under Title IV, except a DST of P15.00 applies for notarial acknowledgment.
Because the transfer is not a sale but a conveyance without monetary consideration where the beneficial ownership is essentially retained by the original party (real estate developer), hence it is not considered a taxable transaction under Sec. 105 of the Tax Code.
The Condominium Corporation, though enjoying ownership powers, is prohibited by law from transacting the properties for gainful profit.
When the member or stockholder ceases to own a condominium unit in the project, they automatically cease to be a member or stockholder of the Condominium Corporation.
Section 185 of the Revised Documentary Stamp Tax Regulations exempts conveyances of realty not in connection with a sale and without consideration.
This Order takes effect immediately upon its issuance on April 26, 2009.
All other issuances and/or portions thereof inconsistent with this Order are repealed or amended accordingly.