Showing posts with label application of CARs and TCLs. Show all posts
Showing posts with label application of CARs and TCLs. Show all posts

Sunday, June 19, 2016

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.