Sale of Lots by Mun. of Kawit

January 14, 1993 BIR RULING NO. 011-93 SALE OF LOTS BY MUN. OF KAWIT 24 000-00 011-93 Mayor Federico A. Poblete Municipality of Kawit, Cavite This refers to your letter dated December 12, 1992 requesting a ruling as to whether your municipality who has recently sold several lots is subject to corporate income tax and realty tax. In reply thereto, I have the honor to inform you that pursuant to P.D. No. 1177 dated July 30, 1977 all units of government including government-owned or controlled corporations shall pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws. Moreover, P.D. 1931 issued on June 11, 1984 withdrew all exemptions from the payment of duties, taxes, fees, imposts and other charges granted in favor of government-owned or controlled corporations including their subsidiaries. Finally, Executive Order No. 93 effective March 10, 1987 withdrew all tax incentives granted to government and private entities. Such being the case, the sale of several lots by the municipality of Kawit, Cavite is subject to the creditable withholding tax of 5% prescribed by Revenue Regulations No. 1-90 which should be creditable against its regular corporate income tax payments. The basis of the withholding tax is the gross selling price or the total amount of consideration or its equivalent paid to the seller. Revenue Memorandum Circular No. 7-90 defines "gross price" as the consideration stated in the sales document or the fair market value/zonal value whichever is higher. As regards your payment of realty tax, your query should be addressed to the Bureau of Local Government, Department of Finance, Manila, which has jurisdiction on the matter. aisadc JOSE U. ONG Commissioner of Internal Revenue