BIR Ruling [DA-100-97]

March 18, 1997 BIR RULING [DA-100-97] Acebes, Del Carmen, Cordova & Aguilar Law Offices 3/F 110 Legaspi Street Legaspi Village 1229 Makati City Attention: Atty . Ebenezer D . Cordova Gentlemen : This refers to your letter dated March 11, 1997 stating that your client, Sea (South East Asia) Orient Corporation owns a parcel of land covered by Transfer Certificate of Title No. 196154 of the Registry of Deeds of Davao City; and that this land was acquired in 1993, and from the date of acquisition up to the present, the same was never used in business by the taxpayer and the taxpayer is not engaged in the buy and sell of real property. Based on the foregoing, you now request for a confirmation of your opinion that the sale of such land is not subject to VAT since the property is a capital asset. In reply, please be informed that pursuant to Section 100 of the Tax Code, as amended by Republic Act No. 7716, with respect to sale of real property, VAT will apply only if the real property is held primarily for sale to customers in the ordinary course of trade or business. Accordingly, the sale of the said real property is not subject to VAT pursuant to the aforecited provision. (VAT Ruling No. 002 dated May 9, 1996) However, the aforementioned sale is subject to the creditable withholding tax pursuant to Revenue Regulations No. 6-85 as amended By Revenue Regulations No. 12-94. Moreover, pursuant to Section 196 of the Tax Code, as amended, a conveyance or deed whereby land is assigned or transferred to another is subject to documentary stamp tax based on the consideration or value received or contracted to be paid for such realty. Furthermore, the notarial acknowledgment to the said deed is subject to the documentary stamp tax of P15.00 on pursuant to Section 188 of the Tax Code, as amended by Republic Act No. 7660. (BIR Ruling No. 029-96 dated February 27, 1996) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, this ruling shall be considered null and void. cdta Very truly yours, ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)