Supplemental Rules on the Matter of Prescribing the Investigation of Parties in Transactions Involving the Transfer/Assignment/Sale of Properties

The bureau has issued Revenue Memorandum Order (RMO) No. 25-2016 as a supplement to the guidelines and procedure in the conduct of investigation on the capacity of a party/ies to acquire properties provided for in RMO No. 24-2016.

A paragraph shall be added to Section I Guidelines and Procedures (iii)(b) of Revenue Memorandum Order No. 24-2016, and said subsection shall now read as follow:

"b. Financial capacity of the buyer to acquire the Subject Property shall be determined during the application of CARs and TCLs.

If the buyer/trasferee is proven to have no financial capacity to acquire the Subject Property, the transaction is not a sale but a donation and donor's tax should be imposed and not capital gains tax, and a duly executed Deed of Donation shall be required.

However, if the seller/transferor/assignor is a corporation or is a stranger to the buyer/trasferee of the Subject Property, it shall be presumed that the buyer/trasferee/assignee have earned income that he/she/it did not declare and taxes due thereon where not paid. In addition to any tax due on the seller and it is proven that the buyer/transferee/assignee does not have any financial capacity to purchase the Subject Property, income taxes shall be assessed against the buyer/transferee/assignee on that amount of the consideration for which buyer/transferee/assignee on the amount of the consideration for which buyer/trasferee/assignee cannot show proof that he/she/it has the financial capacity for, on the taxable year when the sale/trasferer/assignment of the Subject Property occurred."

The RMO No. 25-2016 is dated June 12, 2016. This Order shall take effect immediately. 

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2025-2016.pdf