BIR Ruling No. 300-12

May 3, 2012 BIR RULING NO. 300-12 RA 6657; BIR Ruling No. 012-01 Fermin A. Calunsag Estaca, Pilar, Bohol Madam : This refers to your request, indorsed to this Office by Revenue Region No. 13, Cebu City, for exemption from the payment of capital gains tax and documentary stamp tax on the sale by Flaviana Licayan Rimata married to Proceso Rimata of parcel of agricultural land to Fermin A. Calunsag married to Marian Ladaga. HTCDcS Documents submitted show that Flaviana Licayan Rimata married to Proceso Rimata is the lawful owner of a parcel of agricultural land situated in Estaca, Pilar, Bohol covered by Transfer Certificate of Title No. 18930 containing 20,000 sq.m. On April 2, 2008, a Deed of Voluntary Land Transfer under R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, was executed by and between Flaviana Licayan Rimata married to Proceso Rimata and Fermin A. Calunsag married to Marian Ladaga transferring the above described property to the latter by way of Voluntary Land Transfer/Direct Payment Scheme pursuant to Section 20 of Republic Act No. 6657. Witnesses to the deed were the local Department of Agrarian Reform officials of Estaca, Pilar, Bohol. Also, the Municipal Agrarian Reform Officer of Estaca, Pilar, Bohol certified that the subject land is under Voluntary Land Transfer-Direct Payment Scheme between the land owners and farmer-beneficiaries. In reply, please be informed that pursuant to Section 66 of Republic Act No. 6657 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." the transactions involving transfer of ownership under R.A. No. 6657 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 the document. DITEAc Accordingly, the transfer by Flaviana Licayan Rimata married to Proceso Rimata of the aforementioned parcel of agricultural land is exempt from the payment of capital gains and documentary stamp taxes imposed under Sections 24 (D) and 196, both of the Tax Code of 1997, as amended. (BIR Ruling No. 012-01 dated March 14, 2001) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue