REQUIREMENRS FOR CAR

Certificate Authorizing Registration (CAR) in the Philippines is one issued by the Bureau of
Internal Revenue (BIR) in relation to transfers of certain properties in the Philippines. Hereunder are
some of its features for easy reference.

A mandatory tax clearance  for the transfer of title

Certificate authorizing registration (CAR) in the Philippines is in effect a tax clearance issued by the
Bureau of Internal Revenue (BIR) relative to the transfer of certain properties. Once issued, it would
mean that applicable taxes on such transfers of properties are being paid – capital gains tax in the
Philippines, documentary stamp tax in the Philippines, creditable withholding tax in the Philippines,
and certification fees, whichever is applicable.
It is a mandatory requirement and the title of the property will not be transferred in the absence of
such CAR. Requirement for certificate authorizing registration on real properties (e.g. land and
condominium units) is imposed under Section 58(E) of the Philippine Tax Code, as amended. For
the Registry of Deeds, it will not issue a new transfer certificate of title (TCT) or condominium
certificate of title (CCT) in the name of the buyer in the absence of the CAR.
With respect to the certificate authorizing registration on shares of stock, it is the BIR regulation that
imposes the same. The Corporate Secretary of a stock corporation in the Philippines will not issue a
new stock certificates in the name of the buyer in the absence of the certificate authorizing
registration from the BIR.

Applies to specific transfers of properties only

Not all property transfers are required certificate authorizing registration in the Philippines. It only
applies to the following properties:

 Real properties covered by transfer certificate of title (TCT);

 Condominiums covered by condominium certificate of title (CCT);
 Shares of stock of a domestic stock corporation in the Philippines

Other properties to be transferred are not required to be secured CAR. Last June 2012, BIR issued
Revenue Memorandum Circular No. 50-2012 imposing a Tax Clearance Certificate (TCC) on the
transfer of Certificate of Public Convenience (CPC) with the Land transportation Franchising
Regulatory Board (LTRFB) for public transport operators. This is comparable to the certificate
authorizing registration but with another name. Please read more on RMC No. 50-2012…
CAR application requirements and process
As to requirements for securing certificate authorizing registration (CAR) in the Philippines, it would
depend on type of property – land, condominium unit, shares of stock. For land and condominium, it
would depend on whether the same is a capital asset or ordinary asset of the seller. The complete
list is available with the BIR One Time Transactions (ONETT). Hereunder are some major
requirements:
Sale of shares of stock:

 Capital gains tax return

 BIR Form No. 2000 – ONETT – Documentary Stamp Tax Return
 Certification fee of P100
 Legal document of transfer – e.g. Deed of Assignment
 Copy of the Stock Certificate to be transferred
  Copy of latest audited financial statements
 Copy of the latest General Information Sheet
 Copy of the articles of incorporation and by-laws of the corporation
 Copies of the documents on the previous acquisition of such shares of stock

Sale of real property:

 Capital gains tax return, if applicable

 BIR Form No. 2000 – ONETT – Documentary Stamp Tax Return
 Proof of withholding, if ordinary asset
 Legal document of transfer – e.g. Deed of Assignment or Deed of Absolute Sale
 Certification fee of P100
 Copy of the transfer certificate of title (TCT) or condominium certificate of title (CCT)
 Copy of the latest tax declaration
 Sketch of property location
 Copies of the documents on the previous acquisition of such property

Based on the above documents, the BIR revenue officers will process the CAR application and upon
finding the same in order, the certificate authorizing registration (CAR) in the Philippines will be
released within approximately a week or two. I suggest you closely monitor the progress of the
application and make a follow-up from time to time while the application is pending. Upon the
release of the certificate authorizing registration, you can now proceed with the Registry of Deeds for
the transfer of title of real properties or with the Corporate Secretary for the issuance of new stock
certificates.

Penalties for failure to secure certificate authorizing registration

Penalties in relation to certificate authorizing registration will be imposed by the BIR upon the late
filing and payment of the related taxes – capital gains tax in the Philippines, withholding taxes in the
Philippines, documentary stamp tax in the Philippines. The usual 25% one-time surcharge (50% if
fraudulent), 20% interest, and compromise penalties based on the  basic amount ranging from P200
to P50,000. Corporate Secretary who will transfer a shares of stock and issue a new Stock
Certificate without the certificate authorizing registration is also exposed to liability.

(Garry S. Pagaspas is a Resource Speaker with Tax and Accounting Center, Inc. He is a Certified
Public Accountant and a degree holder in Bachelor of Laws engaged in active tax practice for more
than seven (7) years now and a professor of taxation for more than four (4) years now. He had
assisted various taxpayers in ensuring tax compliance and tax management resulting to tax savings
rendering tax studies, opinions, consultancies and other related services. For comments, you may
please send mail at garry.pagaspas@taxacctgcenter.org.)
Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert
opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable
to your circumstances.