BIR Ruling

July 23, 1973 Ayala Corporation MSE Bldg., Ayala Avenue Makati, Rizal Gentlemen : This refers to your letter dated July 10, 1973 requesting clarification and or reconsideration of the ruling of this Office of March 16, 1973 to the effect that in the case of capital gains derived during the effectivity of Presidential Decree Nos. 16 and 16-A, 100% thereof will be subject to tax if tax exemption is not availed of, even if the property is held for more than 12 months. In reply, I have the honor to inform you that, after a restudy, this Office has arrived at the conclusion that the foregoing ruling creates heavy tax burden to the holders of capital assets and that it discourages the disposal of such assets, contrary to the "Whereas Clauses" of Presidential Decree Nos. 16 and 16-A. Accordingly, this Office believes that the Decree did not intend to suspend the application of the 50% exemption on the long-term capital gains provided in Section 34(b) of the Tax Code. In view thereof, the foregoing ruling should be, as it hereby, modified in the sense that if the property is held for more than 12 months, only 50% of the gain is taxable. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue