BIR Ruling No. 270-13

July 15, 2013 BIR RULING NO. 270-13 000-00 Emmanuel G. Beja Barangay Captain Barangay Gusa, Cagayan de Oro City Gentlemen : This refers to Resolution No. 07-2012 "Resolution earnestly requesting the Regional Director of the Bureau of Internal Revenue, Region 10, for exemption from payment of capital gains tax for the lot purchased by Gusa Small Valley Landless Association, Inc., located at Gusa, This City, considering that association cannot afford to pay the said tax due in the amount of P54,636.58" dated July 12, 2012 of City Council Session of the City of Cagayan de Oro City, bearing on your request for the exemption from payment of capital gains tax for the lot purchased by Gusa Small Valley Landless Association, Inc. In reply, Sections 24 (D) (1) and 27 (D) (5) of the Tax Code of 1997, as amended, provides: "SEC. 24. Income Tax Rates . xxx xxx xxx (D) Capital Gains from Sale of Real Property . (1) In General. The provisions of Section 39(B) notwithstanding, a final tax of six percent (6%) based on the gross selling price or current fair market value as determined in accordance with Section 6(E) of this Code, whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: . . . ." aEDCSI xxx xxx xxx SEC. 27. Rates of Income tax on Domestic Corporations . xxx xxx xxx (D) Rates of Tax on Certain Passive Incomes . xxx xxx xxx (5) Capital Gains Realized from the Sale, Exchange or Disposition of Lands and/or Buildings . A final tax of six percent (6%) is hereby imposed on the gain presumed to have been realized on the sale, exchange or disposition of lands and/or buildings which are not actually used in the business of a corporation and are treated as capital assets, based on the gross selling price of fair market value as determined in accordance with Section 6(E) of this Code, whichever is higher, of such lands and/or buildings." The subject sale being a disposition of real property under Sections 24 (D) (1) and 27 (D) (5) of the Tax Code of 1997 enumerated above, is subject to the capital gains tax (CGT) of 6% on the capital gains presumed to have been realized from the said conveyance of real property considered as capital assets. It is likewise subject to documentary stamp taxes (DST) imposed under Sections 196 and 188 of the Tax Code of 1997. The CGT and DST are for the account of the seller. Accordingly, your request for exemption from the payment of capital gains tax for the lot purchased cannot be granted for lack of legal basis under the National Internal Revenue Code of 1997, as amended. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue