Exemption from the Capital Gains Tax

May 29, 1990 BIR RULING NO. 104-90 196 000-00 104-90 S i r : This refers to your letter dated July 15, 1989 requesting in effect a ruling on the following queries: (1) Whether or not the phrase "all other taxes" under Section 66 of Republic Act No. 6657 relative to exemptions from taxes and fees of land transfer include the exemption from the payment of documentary stamp tax on transactions under the said Republic Act; aisadc (2) Whether or not the phrase "and other taxes" under Section 9 of Executive Order No. 229 voluntary offer to sell of agricultural lands includes the exemption from the payment of documentary stamp tax on transactions under the said Executive Order; and (3) Whether or not there is still a need for the Revenue District Office to issue a certificate of exemption as to the payment of capital gains tax, and other taxes on transactions under Section 66 of Republic Act No. 6657, Section 9 of Executive Order No. 229 and all other laws regulated thereto. In reply, please be informed that pursuant to Section 66 of Republic Act No. 6657 and Section 9 of Executive Order No. 229 quoted as follows: Republic Act No. 6657 "Sec. 66. Exemption from Taxes and Fees of Land Transfers . Transactions under this Act involving a transfer of ownership, whether from natural or juridical persons, shall be exempted from taxes arising from capital gains. These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof. Provided, That all arrearages in real property taxes, without penalty or interest, shall be deductible from the compensation to which the owner may be entitled." Executive Order No. 229 "Sec. 9. Voluntary Offer to Sell . The government shall purchase all agricultural lands it deems productive and suitable to farmer cultivation voluntarily offered for sale to it at a valuation determined in accordance with Section 6. Such transactions shall be exempt from the payment of capital gains tax and other taxes and fees." the transactions involving transfer of ownership (under R.A. No. 6657) as well as the transactions involving voluntary offer to sell (under E.O. No. 229) are exempt from the capital gains tax and also from "other taxes." Said phrase "other taxes" includes documentary stamp tax imposed under Section 196 of the Tax Code, because documentary stamp tax is substantially a tax on the transaction rather than on document (Op. No. 177, S. of 1959, Sec. of Justice). Accordingly, your queries (1) and (2) are answered in the affirmative. As regards your 3rd query, the Revenue District Officer concerned will not issue a certificate of exemption from the payment of the capital gains tax. Instead, he will issue a certificate authorizing the transfer of property by sale, upon application by the buyer or seller, based on the fact that under the laws above-cited, the transaction is exempt from the capital gains tax. (Sec. 7, Revenue Regulations No. 13-85) cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner