Creditable withholding tax on sale, exchange or transfer of real property

January 16, 1990 REVENUE REGULATIONS NO. 01-90 SUBJECT : Creditable Withholding Tax on Sale, Exchange or Transfer of Real Property TO : All Internal Revenue Officers, Withholding Agents, and Others Concerned Pursuant to the provisions of Section 245, in relation to Section 50(b), both of the National Internal Revenue Code, these regulations, adding a new paragraph (j) to Revenue Regulations No. 6-85, are hereby promulgated. 1 . Section 1 of Revenue Regulations No. 6-85 is hereby amended to read as follows: casia "Sec. 1. Income payments subject to creditable withholding tax and rates prescribed thereon . Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: "(j) Gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of "(i) real property, other than capital assets, by an individual, estate, trust, trust fund or pension fund or real property, whether capital or ordinary asset, by a corporation, who is registered with and certified to as engaged in low-cost housing projects by the Housing and Urban Development Coordinating Council (HUDCC), where the consideration for the sale of the lot or house and lot per transaction does not exceed P500,000 - zero percent (0%); "(ii) real property, other than capital assets, by an individual, estate, trust, trust fund or pension fund or real property, whether capital or ordinary asset, by a corporation who is habitually engaged in real estate business, certified as such by the Chamber of Real Estate and Builders Association, Inc. (CREBA), and who is registered with HUDCC - two and one-half percent (2.5%); "(iii) real property, other than capital assets, by an individual, estate, trust, trust fund of pension fund or real property, whether capital or ordinary asset, by a corporation who is not habitually engaged in real estate business - five percent (5%)." SECTION 2 . Section 2 of Revenue Regulations No. 6-85 is hereby amended to read as follows: "Sec. 2. Persons required to deduct and withhold . The following persons are hereby constituted as withholding agents for purposes of the tax required to be withheld on income payments enumerated in the preceding section: "(a) An individual, with respect to payments made in connection with his trade or business. However, in so far as taxable sale, exchange or transfer of real property specified in Section 1(j) is concerned, individual buyers not engaged in trade or business are also constituted as withholding agents, but they need not register as such." SECTION 3 . These regulations amend Revenue Regulations No. 12-89 dated December 21, 1989 and Revenue Memorandum Circular No. 80-89, clarifying some provisions of said regulations. SECTION 4 . These regulations shall take effect on February 1, 1990. (SGD.) Victor C. Macalincag Acting Secretary of Finance Recommending Approval: (SGD.) JOSE U. ONG Commissioner of Internal Revenue