Symposium on Tax Reform Act of 1997

April 21, 1993 BIR RULING NO. 131-93 REQUEST FOR DISCOUNT ON CAPITAL GAINS TAX DENIED 21 (e) 000-00 131-93 Tulungan at Disciplina Mass Media Action Foundation, Inc. Peace Officers Journal No. 5 Rd. B, Ph-5 COGEO Village Antipolo, Rizal Attention: Bro . Leo Gallardo Barcelo, Sr . President/Board Chairman This refers to your letter dated March 4, 1993 stating that you are a non-profit, non-sectarian, charitable foundation operating purely on meager voluntary donations; that a would-be donor involved in real estate transaction pledged to donate to your corporation the equivalent amount of a discount from the capital gains tax that may be granted by the Bureau of Internal Revenue; and that said donor requested your assistance to realize their appeal for tax discount. In connection therewith, you now request for a ruling to grant discount on the capital gains tax that may be imposed to your would-be donor on his real estate transaction which the latter pledged to donate to your corporation. aisadc In reply, please be informed that Section 21(e) of the Tax Code, as amended provides and we quote: "(e) Capital gains tax from sales of real property . The provisions of Sections 33(b) notwithstanding, 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, by individuals, including estates and trusts, shall be taxed at the rate of 5% based on the gross selling price or the fair market value prevailing at the time sale, whichever is higher . Provided, that the tax liability, if any, on gains from sales or other dispositions of real property to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations shall be determined either under Section 21(a) or under this subsection, at the option of the taxpayer." (Emphasis supplied) Since neither the aforequoted provision, nor any provision in the Tax Code allow this Bureau to grant discounts to any taxpayer, we regret to inform you that your request has to be, as it is hereby, denied for lack of legal basis. cd EUFRACIO D. SANTOS Deputy Commissioner of Internal Revenue