BIR Ruling No. 721-19

December 2, 2019 BIR RULING NO. 721-19 Sec. 99, TC & Sec. 66, RA 6657 AAA _______________ Dear AAA, This refers to your letter dated February 2, 2017 requesting for exemption from the payment of donor's tax under Section 99 of the Tax Code of 1997, as amended. TAIaHE Documents show that BBB, CCC, DDD, EEE, married to FFF, GGG, married to HHH, and III, married to JJJ (collectively referred to as "the KKKs") are the registered owners of an agricultural rice land situated in Brgy. Masagana, Pandi, Bulacan with an area of 17,100 sq.m.,more or less and covered by Transfer Certificate of Title No. 000-0000000000 of the Registry of Deeds for Meycauayan, Bulacan and Tax Declaration No. 0000-00000-00000. On January 7, 2016, a "Kasulatan ng Pagkakaloobpala ng Lupa sa Magsasaka," was executed by BBB et al. (Donors),in favor of the lone farmer-beneficiary, AAA (Donee),and which donation was accepted by the latter. In reply, please be informed that Section 66 of Republic Act No. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of 1988," which you invoked to support your request for tax exemption, provides: " 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." Under the above-quoted provision, the conveyance by the owner of the land in the form of disturbance compensation, is exempt from capital gains tax and documentary stamp tax. However, the Department of Agrarian Reform (DAR), the implementing agency of the Comprehensive Agrarian Reform Program (CARP), certified on February 22, 2016 that the subject property is a retention area and is not covered by CARP since the property involved is less than five (5) hectares. Accordingly, the tax incentive granted under Section 66 of Republic Act No. 6657 or the Comprehensive Agrarian Reform Law finds no application to your case. In view of the foregoing, the transfer by the KKKs of their property in your favor is subject to donor's tax pursuant to Section 99 (B) of the Tax Code of 1997, as amended. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. cDHAES Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue