Title
Reverting Tax Filing Venue for Large Taxpayer Realty
Law
Bir Revenue Regulations No. 5-2009
Decision Date
Mar 16, 2009
BIR Revenue Regulations No. 5-2009 mandates that large taxpayers must file capital gains tax, creditable withholding tax, and documentary stamp tax returns, as well as make payments, at the Revenue District Office where the real property is located, ensuring uniformity and efficiency in processing real estate transactions.
capital gains
documentary stamp
real property

Legal Basis and Reversion Policy

  • Section 244 of the National Internal Revenue Code of 1997, as amended, authorizes the issuance of these Regulations in relation to Sections 27(A), 27(D)(5), 57(A), 57(B), 196, and 245(j) of the Tax Code.
  • The Regulations revert the venue for filing returns and paying taxes due on onerous transfers of real property owned by large taxpayers back to the RDO that has jurisdiction over the place where the property is located.
  • Payments and filings must be made through Authorized Agent Banks (AABs) located within the concerned RDO that covers the property’s location.
  • The Regulations establish uniform processing rules for large and non-large taxpayers by aligning venue with the property’s location and enabling expedient ocular inspection before CAR/TCL issuance.

Purpose and Policy Statement

  • The Regulations implement the venue rule under Revenue Regulations No. 8-98, which determines the venue for filing and payment by the place where the property is located for real estate transactions for all taxpayers.
  • The Regulations address confusion created when Revenue Regulations No. 4-2008 amended the large-taxpayer venue rules by centralizing processing in the concerned Large Taxpayers Office.
  • The Regulations restore the property-locational venue for uniformity in processing real estate transactions of taxpayers classified as large or non-large.
  • The Regulations require the return filing and payment steps and the CAR/TCL process to support expedient ocular inspection of the property prior to CAR/TCL issuance.

Scope, Coverage, and Affected Taxes

  • The venue rules apply to returns and payments for real properties owned by large taxpayers involving onerous transfers.
  • The affected taxes and returns include:
    • Capital Gains Tax (CGT) returns (BIR Form No. 1706).
    • Creditable Withholding Tax (CWT) returns (BIR Form No. 1606).
    • Documentary Stamp Tax (DST) returns (BIR Form No. 2000-OT).
  • The Regulations govern transfers where properties are treated as:
    • Capital assets for CGT/DST purposes.
    • Ordinary assets for CWT/DST purposes.
  • The venue rules apply whether the seller/transferor is a large taxpayer or a non-large taxpayer.
  • The Regulations apply to taxable foreclosure sales as well.

Time and Place Rules for Capital Assets (CGT/DST)

  • Within 30 days following each sale, exchange, or disposition of lands and/or buildings treated as capital assets (i.e., not actually used in the business of a corporation), the Capital Gains Tax Return (BIR Form No. 1706) must be filed by either the seller or the buyer.
  • The CGT return must be filed and payment made to an AAB located within the RDO having jurisdiction over the place where the property being transferred is located.
  • The CGT basis for payment is the gross selling price or fair market value as determined under Section 6(E) of the Tax Code, whichever is higher.
  • The Documentary Stamp Tax Return (BIR Form No. 2000-OT) must be filed within 5 days after the close of the month when the taxable document was made, signed, accepted, or transferred.
  • The DST due must be paid at the time of filing of the DST return to the AAB within the RDO having jurisdiction over the property location, based on the consideration contracted to be paid for the realty or its fair market value under Section 6(E) of the Tax Code, whichever is higher.

Time and Place Rules for Ordinary Assets (CWT/DST)

  • CWT on the sale, transfer, or exchange of real property classified as ordinary assets must be paid by the withholding agent/buyer upon filing of the CWT Return (BIR Form No. 1606).
  • The CWT return must be filed with an AAB located within the RDO having jurisdiction over the place where the property is located.
  • The CWT return and payment are due within 10 days following the end of the month in which the transaction occurred.
  • CWT payment is also subject to specific rules prescribed by Revenue Regulations No. 2-98, as amended, and the EFPS regulations if the taxpayer is an EFPS taxpayer.
  • The Documentary Stamp Tax Return (BIR Form No. 2000-OT) must be filed within 5 days after the close of the month when the taxable document was made, signed, accepted, or transferred.
  • DST must be paid at the time of filing of the DST return to the AAB within the RDO with jurisdiction over the property location, based on the consideration contracted or fair market value under Section 6(E), whichever is higher.

Certificate Authorizing Registration / Tax Clearance

  • The RDO covering the property location must issue a Certificate Authorizing Registration (CAR) or Tax Clearance Certificate (TCL) in favor of the transferee upon presentation of the following with bank validation evidencing full payment of applicable taxes:
    • Capital Gains Tax Return and DST for transfers of capital assets; or
    • Creditable Withholding Tax Return and DST for transfers of ordinary assets.
  • For sale or transfer of ordinary assets, the issuing RDO must notify the RDO having jurisdiction over the seller’s place of business to conduct an immediate post-audit of the seller’s Quarterly Income Tax Return and Quarterly VAT Return to ensure correct payment of:
    • income tax,
    • value added tax (if applicable), and
    • documentary stamp tax.
  • The revenue office in the issuing RDO must cause the following information to be indicated on the reverse side of all copies of the document of sale/exchange/transfer, consistent with the CAR details:
    • CAR Number, Date of CAR, Title Number of the Property, Classification of the Property, Location of the Property, Area of the Property, Selling Price, Fair Market Value,
    • Type of Taxes Paid (capital gains tax or expanded creditable withholding tax),
    • Amount of Taxes Paid,
    • Official Receipt Number/ Validation Number and the corresponding Date of the Official Receipt/Date of Payment/Date of Validation.
  • All copies of the document of sale/exchange/transfer must first be presented to assigned revenue officers, which must indicate at the back of the documents the information contained in the CAR/TCL before the CAR/TCL is released.
  • The CAR/TCL must be signed by the Revenue District Officer of the district having jurisdiction over the property location.

CAR/TCL Validity, Revalidation, and Register of Deeds

  • A CAR/TCL issued by the RDO has a validity period of one (1) year for presentation to the Register of Deeds.
  • If not presented within the one-year period, the CAR/TCL may be revalidated, but the total validity may not exceed two years counted from the CAR/TCL issuance date.
  • Revalidation must be done by stamping the phrase “Revalidated on _____ to expire on _____” after validating the authenticity and validity of the old CAR/TCL sought to be revalidated.
  • A CAR/TCL must be presented to the Register of Deeds within a maximum period of not more than two (2) years; otherwise, it is deemed permanently expired and of no effect.
  • New returns and proof of tax payments are required to obtain a new CAR/TCL.
  • The Register of Deeds must not honor any CAR/TCL with erasures or alterations.

Validity of Earlier Revenue Regulations

  • The provisions of Revenue Regulations No. 24-2002 that prescribe periodic information submissions by the Land Registration Authority (LRA), the Register of Deeds, and the Assessor’s Office are maintained as valid and effective.
  • Revenue Regulations No. 24-2002 continues to be effective regarding the specific information to be annotated by the RDO or Register of Deeds to certain documents and the manner of issuance, recording, and monitoring of CAR.
  • Revenue Regulations No. 24-2002 remains effective on responsibilities relating to ensuring internal revenue taxes on real property transfers are paid and remitted and on the Register of Deeds responsibilities.

Transitory Rules for Large Taxpayers’ Real Estate Deals

  • These transitory rules apply to real estate sale transactions of large taxpayers prior to the effectivity of BIR Revenue Regulations No. 5-2009.
  • For cash basis or deferred payment sales of large taxpayers not on installment plan basis where payments in the year of sale exceed 25% of the selling price, and where CGT or expanded CWT returns and DST returns have already been filed and taxes due (if any) have already been paid to the concerned LTS Office, the corresponding CAR/TCL remains to be processed and issued by the concerned LTS Office even after effectivity.
  • For large taxpayers on installment basis where payments in the year of sale do not exceed 25% of the selling price:
    • Where full payment of the full consideration of the real property has already been made and corresponding returns have already been filed and taxes due (if any) have already been fully paid to the concerned LTS Office, the corresponding CAR/TCL remains to be processed and issued by the concerned LTS Office even after effectivity.
    • Where full payment has not yet been made as of effectivity, the remaining installment payment of taxes due as of effectivity accrues to the RDO where the property is located, which becomes responsible for processing and issuing the TCL/CAR.
  • Documents submitted and tax returns relative to prior tax payments made to the concerned LTS Office must be endorsed by the concerned LTS Office to the RDO where the property is located for consolidation to determine full payment status and compliance with documentary requirements before issuance of the CAR/TCL.

Repeal and Inconsistency Rule

  • All revenue rules and regulations, and parts thereof, inconsistent with BIR Revenue Regulations No. 5-2009 are amended, modified, or revoked accordingly.

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