BIR Ruling [UN-119-95]

March 24, 1995 BIR RULING [UN-119-95] PHIVIDEC Industrial Authority 3rd & 4th Floors, DAO 1 Condominium Salcedo St., Legaspi Village Makati, Metro Manila Attention: Gen . Romeo M . Recina (Ret . ) Administrator Gentlemen : This refers to your letters dated October 27 and November 25, 1994, in effect, requesting for a ruling that for purposes of imposing the capital gains and documentary stamp taxes, the lands within the PHIVIDEC Industrial Estate in Misamis Oriental be exempted from the new zonal values of real properties as determined by this Office. cdtech Documents submitted disclosed that it is the policy of the Government to encourage, promote, and sustain the economic and social growth of the Country; that in order to carry out the above policy, a body corporate to be known as the PHIVIDEC Industrial Authority is hereby created; that the Authority as hereinafter referred to shall be a subsidiary of the Philippine Veterans Investment Development Corporation created under P. D. 243, as amended by P. D. 353; and that the functions of the Authority are governmental and proprietary. In reply, please be informed that pursuant to Revenue Memorandum Order No. 41-91 stating: "In all cases involving sale, exchange, or any disposition of real property, the tax base for documentary stamp tax purposes shall be the same as the tax base used in the computation of the capital gains tax which means, gross selling price, fair market value, or zonal value of the real property, whichever is higher, except in the following instances, where actual consideration appearing in the Deed of Sale shall be an acceptable tax base in the computation of not only the capital gains tax but also of the documentary stamp tax, viz: xxx xxx xxx "4. Negotiated purchase and/or sale of land by a government agency or government-owned corporation xxx xxx xxx" the tax base for capital gains tax and documentary stamp tax purposes on sales, exchange or any disposition or conveyance of real property to the government or any of its agencies, including government owned or controlled corporation shall be the negotiated price appearing in the Deed of Sale. (BIR Ruling Nos. 105-91 and 001-91) Such being the case, the basis in the computation of the capital gains and documentary stamp taxes on the sales of real properties within the PHIVIDEC Industrial Estate in the Province of Misamis Oriental, to the PHIVIDEC Industrial Authority, shall be the negotiated price and not the zonal values established in the said areas. cd Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant Legal Service