Proceeds from the Sale of Real Property is Subject to Gross Receipts Tax and Creditable Withholding Tax

October 21, 1991 BIR RULING NO. 213-91 50 (b) 119 (c) 000-00 213-91 Gentlemen : This refers to your letter dated January 25, 1991 requesting a ruling as to whether or not you are subject to the gross receipts tax (GRT) on the proceeds from the sale of your property in Quezon City, notwithstanding your payment of the creditable withholding tax due thereon. cdt In reply, please be informed that under Revenue Memorandum Circular No. 7-90 clarifying some pertinent provisions of Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90 implementing Section 50 (b) of the Tax Code, as amended, all sales, exchanges, or transfers of real properties (whether classified as ordinary or capital assets) beginning January 1, 1990 by corporation and those classified as ordinary assets by individuals shall be subject to the creditable withholding tax at the rates prescribed under said regulations. On the other hand, under Section 119 (c) of the Tax Code, as amended, there shall be collected a tax on gross receipts derived from sources within the Philippines by all banks and non-bank financial intermediaries or royalties, rentals or property, real or personal, profits from exchange and all other items treated as gross income under Section 28 of the Tax Code, which includes gains derived from dealings in property. It is noted that the creditable withholding tax prescribed under Revenue Regulations Nos. 12-89 and 1-90 implementing Section 50 (b) of the Tax Code is a tax on income while the gross receipts tax imposed under Section 119 (c) of the Tax Code is a business tax. Such being the case, it is therefore clear that you are subject not only to the creditable withholding tax imposed under Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90 implementing Section 50 (b) of the Tax Code which is based on gross selling price, but also to the gross receipts tax imposed under Section 119 (c) of the same Code on gains derived from the sale of your said property located in Quezon City, considering that your payment of the creditable withholding tax which is a tax on income does not preclude your being subject to the gross receipts tax prescribed under Section 119 (c) of the Tax Code, which is a business tax imposed on gross receipts of banks and non-bank financial intermediaries. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner