Creditable Withholding Tax on Sales of Real Property

April 30, 1990 BIR RULING NO. 068-90 50 (b) 000-00 068-90 Gentlemen : This refers to your letter dated February 9, 1990 requesting a ruling as to whether or not a sale consummated and notarized on December 31, 1989 and presented to this Office for payment of documentary stamps on January 31, 1990 is subject to the creditable withholding tax on sales of real property. aisadc It is represented that you are of the opinion that the abovementioned transaction having been entered into after November 30, 1989 and before January 1, 1990 is not subject to the creditable withholding tax under Revenue Regulations No. 1-90 nor Revenue Memorandum Circular No. 80-89 but only to the assessment of penalties for late payment of documentary stamp tax. In reply, please be informed that under No. 1 illustration (d) of Revenue Memorandum Circular No. 7-90 clarifying pertinent provisions of Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90, if a Deed of Sale notarized on December 10, 1989 was presented to the BIR not later than January 9, 1990, such transaction is not subject to the creditable withholding tax. However, if the sales document was submitted to the BIR only on January 15, 1990, the sale is already subject to the creditable withholding tax because more than 30 days have elapsed from the date of sale. The reason for the cut-off date is to prevent antedating of public instruments transferring real properties. However, the Revenue District Officer may issue the Certificate Authorizing Registration without the payment of the creditable withholding taxes where the taxpayer can clearly prove that there was no antedating and the late submission of the Deed of Sale was due to a reasonable and justifiable cause, such as when due to a fire in Quezon City Hall the title of the property was destroyed and had to be judicially reconstituted, or the Contract to Sell shows the last installment to have been paid on or before November, 1989, or the new Deed of Sale amends only some minor details in the old Deed of Sale notarized in 1989 like adding the Tax Account Numbers of the contracting parties. In such case, the revenue enforcement officer should state in his written report the relevant circumstances and attach to his report the other documents submitted by the taxpayer. Moreover, in order to simplify tax administration, the reduced rates in Revenue Regulations No. 1-90 may be withheld and paid by the withholding agent on real estate transactions consummated before February 1, 1990, if the sales document is presented to the BIR on or before February 1, 1990. In other words, beginning February 1, 1990, the test to be used for purposes of determining whether the transaction is subject to the old or new withholding tax rates is the date of receipt or presentation of the Deed of Sale to the BIR. Accordingly, in the instant case, since the sales documents were presented to the BIR beyond the 30-day period, and the late submission of the Deed of Sale was not shown to be due to a justifiable cause, a sale consummated and notarized on December 31, 1989 and presented to this Office for payment of documentary stamps on January 31, 1990 is subject to the creditable withholding tax on sales of real property at the rates imposed under Revenue Regulations No. 12-89 prior to its amendment by Revenue Regulations No. 1-90. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner