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DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
Quezon City
(6) On 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 and other forms of
conditional sales based on the gross selling price or fair market value as
determined in accordance with Sec. 6(E) of the Code (i.e., the authority of the
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Commissioner to prescribe real property values), whichever is higher – Six
percent (6%).
After depositing the amount representing the six percent (6%) capital
gains tax as mentioned above, the Buyer/Transferee and the Seller, shall
jointly file, within thirty (30) days from the date of the sale or disposition of
the principal residence, with the Revenue District Office having jurisdiction
over the property, in duplicate, the Final Capital Gains Tax Return (BIR Form
No. 1706, or any form number assigned by the BIR), covering the property
bought with no computed tax due stating that the supposed-tax due/amount so
withheld by the buyer is maintained in an escrow account, which amount will
be used to satisfy future tax liability, if any, on the subject transaction. For
purposes of the capital gains tax otherwise due on the sale, exchange or
disposition of the said Principal Residence, the execution of the Escrow
Agreement referred to in the immediately preceding paragraph shall be
considered sufficient. The tax return so filed in pursuance hereof shall bear the
addresses of both the seller and the buyer.
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If within thirty (30) days after the lapse of the aforesaid 18-month
period, the Seller/Transferor fails to submit documentary evidence showing
that he has utilized the proceeds of sale or disposition of his old principal
residence to acquire/construct his new principal residence, he shall be treated
as deficient in the payment of his capital gains tax on the sale or disposition of
his aforesaid Principal Residence, and shall be accordingly assessed for
deficiency capital gains tax, inclusive of penalties and the 20% interest per
annum computed from the 31st day after the date of sale/disposition of the said
principal residence, pursuant to the provisions of Section 228 of the Code, as
implemented by Revenue Regulations No. 12-99, in relation to Section 249 of
the said Code.
In the issuance of assessments, the Seller shall receive all the required
notices following existing procedures. Upon the time that the said deficiency
tax assessment has become final and executory, the deposit in escrow,
inclusive of its interest earnings, shall be forfeited and applied against the
deficiency capital gains tax liability. If the same is insufficient to cover the
entire amount assessed, the Seller/Transferor shall remain liable for the
remaining balance of the assessment. On the other hand, the excess of the
deposit in escrow, if any, shall forthwith be returned to the Seller, by the Bank
upon written authorization from the Commissioner or his duly authorized
representative.
(5) On capital gains presumed to have been realized from the sale,
exchange or other disposition of land and building located in the Philippines
classified as capital assets, based on the gross selling price or fair market
value as determined in accordance with Sec. 6(E) of the Code, whichever is
higher – Six percent (6%).
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“Sec. 2.57. 2. 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:
(C) Rentals
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(I) Professional fees paid to medical practitioners. – Any amount
collected for and paid to medical practitioners (includes doctors of medicine,
doctors of veterinary science and dentists) by hospitals and clinics, or paid
directly to the medical practitioners by patients who were ‘admitted and
confined’ to such Hospitals or Clinics, or paid directly to such medical
practitioners by health maintenance organizations (HMOs) and/or similar
establishments which is likewise covered by Section 2.57.2 (A)(1). – Ten
percent (10%);
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The term ‘consideration’ refers to the selling price exclusive of
interest. Interest earned as an incident of installment payment, if any, shall be
subject to the ordinary income tax rate.
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of withholding tax. – Income payments made by any of the top ten thousand
(10,000) private corporations, as determined by the Commissioner, to their
local/resident supplier of goods and local/resident supplier of services,
including non-resident alien engaged in trade or business in the Philippines
b) Any taxpayer with net VAT paid or payable for the preceding year
of at least P100,000.00;
c) Any taxpayer with annual income tax paid or payable for the
preceding year of at least P200,000.00;
e) Any taxpayer whose gross sales for the preceding year is over
P10,000,000.00; or
f) Any taxpayer whose gross purchases for the preceding year is over
5,000,000.00.
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notified, in writing, by the Commissioner that it has been selected as one of
the top ten thousand (10,000) private corporations.
Any corporation which has been duly classified and notified as large
taxpayer by the Commissioner pursuant to RR 1-98, as amended, shall be
automatically considered one of the top ten thousand (10,000) private
corporations, provided, however, that its authority as a withholding agent shall
be effective only upon receipt of written notice from the Commissioner that it
has been classified as a large taxpayer, as well as one of the top ten thousand
(10,000) private corporations, for purposes of these regulations.
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announced through the issuance of a Revenue Memorandum Circular to be
issued for this purpose.
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The term “agricultural suppliers” refers to suppliers/sellers of
agricultural and marine food products, livestock and poultry of a kind
generally used as, or yielding or producing foods for human consumption; and
breeding stock and genetic materials therefor. “Livestock” shall include
cows, bulls and calves, pigs, sheep, goats and other animals similar thereto.
“Poultry” shall include fowls, ducks, geese, turkey and others similar thereto.
“Marine food products” shall include fish and crustaceans, such as but not
limited to, eels, trout, lobsters, shrimps, prawns, oysters, mussels and clams.
Meat, fruits, fish, vegetables and other agricultural and marine food
products, even if they have undergone the simple processes of preparation or
preservation for the market, such as freezing, drying, salting, smoking or
stripping, including those using advanced technological means of packaging,
such as shrink wrapping in plastics, vacuum packing, tetra-pak and other
similar packaging method, shall still be covered by this subsection.
Polished and/or husked rice, corn grits, locally produced raw cane
sugar and ordinary salt shall be considered as agricultural food products.
Since the tax herein involved and being withheld is income tax, the
burden of the tax is really upon the seller although the mode of payment of the
tax is through withholding by the buyer. As such, the tax withheld is
considered a part of the consideration agreed upon between the seller and
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buyer resulting, therefore, to a net take to the seller of only the difference
between the agreed consideration/selling price and the tax withheld.
(a) For both large and non-large taxpayers, the withholding tax return,
whether creditable or final (including final withholding taxes on interest from
any currency bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar arrangements) shall be
filed and payments should be made, within ten (10) days after the end of each
month, except for taxes withheld for the month of December of each year,
which shall be filed on or before January 15 of the following year; and except
for the final capital gains tax on the sale or other onerous disposition of real
property considered as capital asset which must be taken/withheld from the
seller by the buyer and remitted within thirty (30) days from the date of
notarization of the transfer document to the collecting agent of the RDO
having jurisdiction over the place where the property is located.
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SEC. 6. REQUIREMENTS FOR DEDUCTIBILITY OF CERTAIN INCOME
PAYMENTS. – Section 2.58.5 of Revenue Regulations No. 2-98, as amended, is hereby
further amended to read as follows:
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
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