Capital Gains Realized by Non-resident Aliens Not Engaged in Trade or Business Within the Philippines from Sales of Real Property is Subject to the 5% Tax

June 29, 1987 BIR RULING NO. 180-87 22 (b) 21 (e) 000-00 180-87 S i r : This refers to your letter dated June 19, 1987 requesting a ruling as to whether your son, an Australian citizen is subject to the capital gains tax on the gains derived from the sale of his real property. It is represented that your son, Mr. Gonzales D. Reynaldo, acquired an Australian citizenship by naturalization in May, 1985; that he owned a residential land in Metro Manila before he became an Australian citizen; and that he has authorized you as his Attorney-in-Fact to sell the said property. In reply, I have the honor to inform you that under section 22(b) of the Tax Code as amended by Executive Order No. 37 capital gains realized by non-resident aliens not engaged in trade or business within the Philippines from sales of real property shall be subject to the tax prescribed under Section 21(e) of the Tax Code as amended. Such being the case, gains realized by your son from the sale of his residential land are subject to the 5% tax based on the gross selling price or the fair market value of the property prevailing at the time of the sale, whichever is higher. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner