BIR Ruling [DA-205-00]

April 4, 2000 BIR RULING [DA-205-00] RA 6657; 104-90; DA568-98 Ms. Marcela V. Soriano Barangay Labney, San Jacinto Pangasinan M a d a m : This refers to your letter dated August 5, 1999 requesting for a ruling as to whether or not the sale of agricultural land under R.A. No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law" is exempt from the payment of the capital gains tax and the documentary stamp tax. It appears that Ms. Helen Zulueta and her husband are the landowners of a certain agricultural land covered by Tax Declaration No. 4953 containing an area of Fifteen Thousand (15,000) square meters; and that on November 20, 1997, a Deed of Absolute Sale was executed by Ms. Helen Zulueta with the consent of her husband, transferring and conveying the said agricultural land in favor of Spouses Rodolfo Soriano and Marcela Soriano. In reply, please be informed that pursuant to Section 66 of Republic Act No. 6657, reading "SEC. 66. Exemptions from Taxes and Fees of Land Transfers . Transactions under this Act involving transfer of ownership, whether from natural or juridical persons, shall be exempted from taxes arising from capital gains tax. These transactions shall also be exempted from the payment of registration fees, all other taxes and fees for the conveyance or transfer thereof: Provided, That all arrearages in real property taxes, without penalty and interest, shall be deductible from the compensation to which the owner may be entitled." (Emphasis supplied) the transaction involving transfer of ownership under Republic Act No. 6657 is exempt from capital gains tax and also from "other taxes". Said phrase "other taxes" includes documentary stamp tax imposed under Section 196 of the Tax Code of 1997, because documentary stamp tax is substantially a tax on the transaction rather than on the document. ( Op. No. 177, S. of 1939, Secretary of Justice ) ( BIR Ruling No. DA568-98 dated December 21, 1998, citing BIR Ruling No. 104-90 dated May 29, 1990 ) This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. SDTIaE Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)