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Capital Gains Tax

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 Capital Gains Tax
Index for Capital Gains Tax
 Description
 Capital Gains Tax for Onerous Transfer of Real Property Classified as Capital Assets
(Taxable and Exempt)
 Capital Gains Tax for Onerous Transfer of Shares  of Stocks Not Traded Through the
Local Stock Exchange
 Annual Capital Gains Tax for Onerous Transfer of  Shares of Stocks Not Traded Through
the Local Stock Exchange
  Related Revenue Issuances
 Codal Reference
 Frequently Asked Questions

DESCRIPTION
Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller
from the sale, exchange, or other disposition of capital assets located in the Philippines,
including pacto de retro sales and other forms of conditional sale.

[return to index]

CAPITAL GAINS TAX FOR ONEROUS TRANSFER OF REAL PROPERTY

CLASSIFIED AS CAPITAL ASSETS (TAXABLE AND EXEMPT)
Tax Form
BIR Form 1706 – Final Capital Gains Tax Return (For Onerous Transfer of Real Property
Classified as Capital Assets -Taxable and Exempt)
Documentary Requirements
Mandatory Requirements [additional two (2) photocopies of each document]:
1. Taxpayer Identification Number (TIN) of Seller/s and Buyer/s;
2. Duly Notarized Original Deed of Absolute Sale/Deed of Transfer;
3. Certified True Copy/ies of the Tax Declaration at the time or nearest to the date of the
transaction issued by the Local Assessor’s Office for land and improvement;
4. Certified True Copy/ies of Original/Transfer/Condominium Certificate/s of Title
(OCT/TCT/CCT);
5. Sworn Declaration of No Improvement by at least one (1) of the transferees or Certificate
of No Improvement issued by the Assessor’s Office, if applicable;
6. Validated return and Original Official Receipt/Deposit Slip as proof of payment; for no
payment return, copy of Acknowledgment Receipt of return filed thru eBlRForms;
7. Acknowledgment receipt of proceeds of sale from the seller;
8. Secretary’s Certificate or Board Resolution, approving the sale/transfer of the real
property and indicating the name and position of the authorized signatory to the Deed of
Sale/Assignment, if the seller/transferor is a corporation;
9. Duly Notarized Original Special Power of Attorney (SPA) from the transacting party/ies
if the person signing is not one of the parties to the Deed of Transfer;
For sales made in prior years [additional two (2) photocopies of each document]
Certified True Copy of Deed of Sale/Assignment/Exchange or certification of notarization issued
by the Clerk of Court of City/Municipality or Regional Trial Court (RTC) or the Office of the
Executive Judge of the City/Municipality where the Notary Public is registered or certification of
notarization from the National Archives Office
Other Additional Requirements, if applicable [additional two (2) photocopies of each
document]:
 Duly Notarized Original Special Power of Attorney (SPA), if the person
transacting/processing the transfer is not a party to the transaction
 Certification from the Philippine Consulate if document is executed abroad
  Location Plan/Vicinity map issued by the Local Assessor’s Office if zonal value cannot
be readily determined from the documents submitted
 Certificate of Exemption/BIR Ruling issued by the Commissioner of Internal Revenue or
his authorized representative, if tax exempt
 Such other documents as may be required by law/rulings/regulations/etc.
Procedures
 Who shall file
The Capital Gains Tax Return (BIR Form No. 1706) shall be filed in triplicate copies by the
Seller/Transferor who are natural or juridical whether resident or non-resident, including Estates
and Trusts, who sell, exchange, or dispose of a real property located in the Philippines classified
as capital asset as defined under Sec. 39 (A) (1) of RA No. 8424. The term “sale” includes pacto
de retro sale and other forms of conditional sales. The transaction may be taxable or exempt.
Taxpayers who are filing BIR Form No. 1706 are excluded in the mandatory coverage from
using the eBIRForms (Section 2 of RR No. 9-2016)
 When and Where to File and Pay
The Capital Gains Tax Return (BIR Form No. 1706) shall be filed and paid within thirty (30)
days following the sale, exchange or disposition of real property, with any Authorized Agent
Bank (AAB) or Revenue Collection Officer (RCO) of the Revenue District Office (RDO) having
jurisdiction over the place where the property being transferred is located.
When the return is filed with an AAB, taxpayer must accomplish and submit BIR-prescribed
deposit slip, which the bank teller shall machine validate as evidence that payment was received
by the AAB. The AAB receiving the tax return shall stamp mark the word “Received” on the
return and also machine validate the return as proof of filing the return and payment of the tax by
the taxpayer, respectively. The machine validation shall reflect the date of payment, amount paid
and transactions code, the name of the bank, branch code, teller’s code and teller’s initial. Bank
debit memo number and date should be indicated in the return for taxpayers paying under the
bank debit system.
Filing and payment may also be made using the electronic filing and payment facilities of the
BIR (i.e., EFPS/eBIRForms and G-cash, credit, debit card/prepaid card)
For transactions covered by one (1) Deed of Sale/Exchange/Donation involving one (1) to three
(3) properties, the taxpayer can avail of the ‘fast lane’ pursuant to Revenue Memorandum
Circular (RMC) No. 43-2018, as amended by RMC No. 107-2018. Payments amounting to
twenty thousand pesos (P 20,000.00) and below shall be paid in cash while payments above
twenty thousand pesos (P 20,000.00) shall be made through Manager’s Check or Cashier’s
Check to the RCO of the RDO having jurisdiction over the place where the property being
transferred is located.
Tax Rate
For real property - 6%.

[return to index]

CAPITAL GAINS TAX FOR ONEROUS TRANSFER OF SHARES OF STOCKS NOT

TRADED THROUGH THE LOCAL STOCK EXCHANGE
Tax Form
BIR Form 1707 - Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks Not
Traded Through the Local Stock Exchange)
Documentary Requirements
Mandatory Requirements [additional two (2) photocopies of each document]:
1. Taxpayer Identification Number (TIN) of Seller/s and Buyer/s;
2. Duly Notarized Original Deed of Absolute Sale/Document of Transfer;
3. Stock certificate;
4. Proof of acquisition cost (i.e. Deed of Sale: fair market value (FMV) at the time of
acquisition);
5. Validated return and Original Official Receipt/Deposit Slip as proof of payment; for no
payment return, copy of Acknowledgment Receipt of return filed thru eBlRForms;
6. Secretary’s Certificate or Board Resolution, approving the sale/transfer of the shares of
stocks and indicating the name and position of the authorized signatory to the Dee of
Sale/Assignment, if the seller/transferor is a corporation;
7. Duly Notarized Special Power of Attorney (SPA) for the transacting party if the person
signing is not one of the parties to the Deed of Transfer;
Additional Requirements, if applicable [additional two (2) photocopies of each document]:
 For claiming expenses of sale - Proof of claimed deductions such as official receipt
and/or invoices;
 For shares of stocks not listed/not traded - Latest Audited Financial Statement of the
issuing corporation with computation of the book value per share;
 For shares of stocks listed/traded - Price index from the Philippine Stock Exchange
(PSE)/latest FMV published in the newspaper at the time of transaction;
 For club shares - Price published in newspapers on the transaction date or nearest to the
transaction date;
 Notarized Original Special Power of Attorney (SPA), if the person transacting/processing
the transfer is not a party to the transaction;
 Certificate of Exemption/BIR Ruling issued by the Commissioner of Internal Revenue or
his authorized representative, if tax exempt;
 Such other documents as may be required by law/rulings/regulations/etc.
Procedures
 Who shall file
The Capital Gains Tax Return (BIR Form No. 1707) shall be filed in triplicate by every natural
or juridical person, resident or non-resident, for sale, barter, exchange or other onerous
disposition of shares of stock in a domestic corporation, classified as capital assets, not traded
through the local stock exchange.
Taxpayers who are filing BIR Form No. 1707 are excluded in the mandatory coverage from
using the eBIRForms (Section 2 of RR No. 9-2016).
 When and Where to File and Pay
The Capital Gains Tax Return (BIR Form No. 1707) shall be filed and paid within thirty (30)
days after each sale, barter, exchange or other disposition of shares of stock not traded through
the local stock exchange with any Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office (RDO) where the seller/transferor is required to register.
When the return is filed with an AAB, taxpayer must accomplish and submit BIR-prescribed
deposit slip, which the bank teller shall machine validate as evidence that payment was received
by the AAB. The AAB receiving the tax return shall stamp mark the word “Received” on the
return and also machine validate the return as proof of filing the return and payment of the tax by
the taxpayer, respectively. The machine validation shall reflect the date of payment, amount paid
and transactions code, the name of the bank, branch code, teller’s code and teller’s initial. Bank
debit memo number and date should be indicated in the return for taxpayers paying under the
bank debit system.
Filing and payment may also be made using the electronic filing and payment facilities of the
BIR (i.e., EFPS/eBIRForms and G-cash, credit, debit card/prepaid card)
Tax Rates
 Effective January 1, 2018 to present (Republic Act (RA) No. 10963/TRAIN Law)
A.  For Individual                      -           15 %
B.  For Corporation:
B.1 Domestic                 -              15 %
B.2 Foreign:
B.2.1.   Not Over P100,000                                   -              5.0 %
B.2.2.  On any amount excess of P100,000             -              10 %
 Effective January 1, 1998 to December 31, 2017 (RA No. 8424/NIRC of 1997)

o Not over P 100,000                                  - Five percent (5%)

o On any amount in excess of P 100,000       - Ten percent (10%)
 

[return to index]

ANNUAL CAPITAL GAINS TAX FOR ONEROUS TRANSFER OF SHARES OF

STOCKS NOT TRADED THROUGH THE LOCAL STOCK EXCHANGE
Tax Form
BIR Form 1707A - Annual Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks
Not Traded Through the Local Stock Exchange)
Procedures
File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the
taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or
transferor of stocks is registered. In places where there are no AAB, the return will be filed
directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.
Tax Rates
 Effective January 1, 2018 to present (RA No. 10963/TRAIN Law)
 
A. For Individual              -        15 %
B. For Corporation:
B.1 Domestic           -        15 %
B.2 Foreign:
B.2.1 Not Over P100,000                           -            5.0 %
B.2.2 On any amount excess of P100,000     -            10 %
 Effective January 1, 1998 to December 31, 2017 (RA No. 8424/NIRC of 1997)
 
 Not over P 100,000 – Five percent (5%)
 On any amount in excess of P 100,000 – Ten percent (10%)
Deadline
 For Individual Taxpayers - On or before April 15 of each year covering all stock
transactions of the preceding taxable year
 For Corporate Taxpayers - On or before the fifteenth (15) day of the fourth (4th) month
following the close of the taxable year covering all transactions of the preceding taxable
year

[return to index]

RELATED REVENUE ISSUANCES

Revenue Regulations (RR) Nos. 2-1998, 8-1998, 4-1999, 13-1999, 7-2003, 17-2003, 30-2003, 4-
2008, 6-2008, 5-2009, 6-2013, 6-2014
Revenue Memorandum Order (RMO) No. 15-2003
Revenue Memorandum Circular (RMC) No. 50-2003, 43-2018, 107-2018
OPM-AS-APMD 2017-06-06
OPM-AS-APMD 2017-06-01

[return to index]

CODAL REFERENCE
 Sections 5 and 7 of Republic Act (RA) No. 10963 (Tax Reform Acceleration and
Inclusion (TRAIN) Law), amending Sections 24 (C) and 27 (D) (2) of National Internal
Revenue Code (NIRC) of 1997, respectively
 Sec. 24 (C), Sec. 24 (D), Sec. 27 (D) (2), Sec. 27 (D) (5), Sec. 28 (A) (7) (c), Sec. 28 (B)
(5) (c) and Sec. 39 (A) of the NIRC of 1997

[return to index]

FREQUENTLY ASKED QUESTIONS

1.) What is meant by capital asset?
Capital assets shall refer to all real properties held by a taxpayer, whether or not connected with
his trade or business, and which are not included among the real properties considered as
ordinary assets under Sec. 39(A)(1) of the Code. [Sec. 2(a) of RR No. 7-2003] 
2.) What is meant by ordinary asset?
Ordinary assets shall refer to all real properties specifically excluded from the definition of
capital assets under Sec. 39(A)(1) of the Code, namely:
1. Stock in trade of a taxpayer or other real property of a kind which would properly be
included in the inventory of the taxpayer if on hand at the close of the taxable year; or
2. Real property held by the taxpayer primarily for sale to customers in the ordinary course
of his trade or business; or
3. Real property used in trade or business (i.e., buildings and/or improvements) of a
character which is subject to the allowance for depreciation provided for under Sec. 34(F)
of the Code; or
4. Real property used in trade or business of the taxpayer.
Real properties acquired by banks through foreclosure sales are considered as ordinary assets.
[Sec. 2(b) of RR No. 7-2003]
3.) What is meant by "Stock classified as Capital Asset"?
“Stock Classified as “Capital Asset” means all stocks and securities held by taxpayers other than
dealers in securities. [Sec. 2(a) of RR No. 6-2008]
4.) What is meant by "Dealer in Securities"?   
“Dealer in Securities” refers to a merchant of stocks or securities, whether an individual,
partnership or corporation, with an established place of business, regularly engaged in the
purchase of securities and the resale thereof to customers; that is one, who as merchant buys
securities and re-sells them to customers with a view to the gains and profits that may be derived
therefrom. "Dealer in securities" means any person who buys and sells securities for his/her own
account in the ordinary course of business (Sec. 3.4, SRC). [Sec. 2(b) of RR No. 6-2008]
5.) What is meant by real property?
Real property shall have the same meaning attributed to that term under Article 415 of Republic
Act No. 386, otherwise known as the Civil Code of the Philippines. [Sec. 2(c) of RR No. 7-2003]
6.) What does a real estate dealer refer to?
A real estate dealer shall refer to any person engaged in the business of buying and selling or
exchanging real properties on his own account as a principal and holding himself out as a full or
part-time dealer in real estate. [Sec. 2(d) of RR No. 7-2003]
7.) What does a real estate developer refer to?
Real estate developer shall refer to any person engaged in the business of developing real
properties into subdivisions, or building houses on subdivided lots, or constructing residential or
commercial units, townhouses and other similar units for his own account and offering them for
sale or lease. [Sec. 2(e) of RR No. 7-2003]
8.) What does a real estate lessor refer to?
Real estate lessor shall refer to any person engaged in the business of leasing or renting real
properties on his own account as a principal and holding himself out as a lessor of real properties
being rented out or offered for rent. [Sec. 2(f) of RR No. 7-2003]
9.) Who are considered engaged in the real estate business?
Taxpayers who are considered engaged in the real estate business shall refer collectively to real
estate dealers, real estate developers and/or real estate lessors. A taxpayer whose primary
purpose of engaging in business, or whose Articles of Incorporation states that its primary
purpose is to engage in the real estate business shall be deemed to be engaged in the real estate
business. [Sec. 2(g) of RR No. 7-2003]
10.) Who are considered not engaged in the real estate business?
“Taxpayers not engaged in the real estate business” refer to persons other than real estate dealers,
real estate developers and/or real estate lessors. [Sec. 2(g) of RR No. 7-2003]
11.) Who are considered habitually engaged in the real estate business?
Real estate dealers or real estate developers who are registered with the Housing and Land Use
Regulatory Board (HLURB) or HUDCC. If the taxpayer is not registered with the HLURB or
HUDCC as a real estate dealer or developer, he/it may nevertheless be deemed to be engaged in
the real estate business through the establishment of substantial relevant evidence (such as
consummation during the preceding year of at least six (6) taxable real estate sale transactions,
regardless of amount; registration as habitually engaged in real estate business with the Local
Government Unit or the Bureau of Internal Revenue, etc.). However, banks shall not be
considered as habitually engaged in the real estate business for purposes of determining the
applicable rate of withholding tax imposed under Sec. 2.57.2(J) of RR No. 2-98, as amended.
[Sec. 3(a) (4) of RR No. 7-2003]
12.) How can you determine whether a particular real property is a capital asset or an
ordinary asset?
a) “Real properties shall be classified with respect to taxpayers engaged in the real estate
business as follows:
i)  All real properties acquired by the real estate dealer shall be considered as ordinary assets.
ii) All real properties acquired by the real estate developer, whether developed or undeveloped as
of the time of acquisition, and all real properties which are held by the real estate developer
primarily for sale or for lease to customers in the ordinary course of his trade or business or
which would properly be included in the inventory of the taxpayer if on hand at the close of the
taxable year and all real properties used in the trade or business, whether in the form of land,
building, or other improvements, shall be considered as ordinary assets.
iii) All real properties of the real estate lessor, whether land, building and/or improvements,
which are for lease/rent or being offered for lease/rent, or otherwise for use or being used in the
trade or business shall likewise be considered as ordinary assets.
iv) All real properties acquired in the course of trade or business by a taxpayer habitually
engaged in the sale of real property shall be considered as ordinary assets. A property purchased
for future use in the business, even though this purpose is later thwarted by circumstances
beyond the taxpayer’s control, does not lose its character as an ordinary asset. Nor does a mere
discontinuance of the active use of the property change its character previously established as a
business property.” [Sec. 3(a) of RR No. 7-2003]
b) In the case of taxpayer not engaged in the real estate business, real properties, whether land,
building, or other improvements, which are used or being used or have been previously used in
trade or business of the taxpayer shall be considered as ordinary assets. [Sec. 3(b) of RR No. 7-
2003]
c) In the case of taxpayers who changed its real estate business to a non-real estate business, real
properties held by these taxpayers shall remain to be treated as ordinary assets. [Sec. 3(c) of RR
No. 7-2003]
d) In the case of taxpayers who originally registered to be engaged in the real estate business but
failed to subsequently operate, all real properties acquired by them shall continue to be treated as
ordinary assets. [Sec. 3(d) of RR No. 7-2003]
e) Real properties formerly forming part of the stock in trade of a taxpayer engaged in the real
estate business, or formerly being used in the trade or business of a taxpayer engaged or not
engaged in the real estate business, which were later on abandoned and became idle, shall
continue to be treated as ordinary assets. Provided however, that properties classified as ordinary
assets for being used in business by a taxpayer engaged in business other than real estate
business are automatically converted into capital assets upon showing of proof that the same
have not been used in business for more than two (2) years prior to the consummation of the
taxable transactions involving said properties. [Sec. 3(e) of RR No. 7-2003]
f) “Real properties classified as capital or ordinary asset in the hands of the seller/transferor may
change their character in the hands of the buyer/transferee. The classification of such property in
the hands of the buyer/transferee shall be determined in accordance with the following rules:
i) Real property transferred through succession or donation to the heir or donee who is not
engaged in the real estate business with respect to the real property inherited or donated, and who
does not subsequently use such property in trade or business, shall be considered as a capital
asset in the hands of the heir or donee.
ii) Real property received as dividend by the stockholders who are not engaged in the real estate
business and who do not subsequently use such real property in trade or business, shall be treated
as a capital asset in the hands of the recipients even if the corporation which declared the real
property dividends is engaged in real estate business.
iii)The real property received in an exchange shall be treated as ordinary asset in the hands of the
transferee in the case of a tax-free exchange by taxpayer not engaged in real estate business to a
taxpayer who is engaged in real estate business, or to a taxpayer who, even if not engaged in real
estate business, will use in business the property received in the exchange.” [Sec. 3(f) of RR No.
7-2003]
g) In the case of involuntary transfers of real properties, including expropriations or foreclosure
sale, the involuntariness of such sale shall have no effect on the classification of such real
property in the hands of the involuntary seller, either as capital asset or ordinary asset as the case
may be. [Sec. 3(g) of RR No. 7-2003]
13.) What is the basis in the valuation of real property? 
The value of the real property will be based on the selling price, fair market value or zonal value
as determined by the Commissioner of Internal Revenue or the fair market value as shown in the
schedule of values of the Provincial or City Assessor, whichever is higher.
If there is no zonal value, the taxable base shall be the gross selling price per sales documents or
the fair market value that appears in the latest tax declaration, whichever is higher.
If there is an improvement, the FMV, based on the latest tax declaration at the time of the sale or
disposition, duly certified by the City/Municipal Assessor shall be used. No adjustments shall be
added on the said value, provided that the tax declaration bears the upgraded fair market value of
the said property pursuant to Section 219 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991 and the last paragraph of the Local Assessment Regulations
No. 1-92 dated October 6, 1992.
However, in case the tax declaration presented was issued three (3) or more years prior to the
date of sale or disposition of the real property, the seller/transferor shall be required to submit a
certification from the City/Municipal Assessor whether or not the same is still the latest tax
declaration covering the said real property. Otherwise, the taxpayer shall secure its latest tax
declaration and shall submit a copy thereof duly certified by the said Assessor. (RAMO 1-2001)
14.) What is meant by "Net Capital Gains"?
"Net Capital Gains" means the excess of the gains from sales or exchanges of capital assets over
the losses from such sales or exchanges. [Sec 2(o) of RR 6-2008]
15.) What are the rules for the determination of amount and recognition of gain or loss in
the sale, barter, or exchange of shares of stock not traded through the Local Stock
exchange?
A. “Determination of Selling Price. — In determining the selling price, the following rules shall
apply:
a.1) In the case of cash sale, the selling price shall be the total consideration per deed of sale.
a.2) If the total consideration of the sale or disposition consists partly in money and partly in
kind, the selling price shall be sum of money and the fair market value of the property received.
a.3) In the case of exchange, the selling price shall be the fair market value of the property
received.” [Sec. 7 (c) (c.1) RR No. 6-2008]
a.4) “Where property, other than real property referred to in Section 24(D), is transferred for less
than an adequate and full consideration in money or money's worth, then the amount by which
the fair market value of the property exceeded the value of the consideration shall be deemed a
gift, and shall be included in computing the amount of gifts made during the calendar year:
Provided, however, that a sale, exchange, or other transfer of property made in the ordinary
course of business (a transaction which is a bona fide, at arm’s length, and free from any
donative intent) will be considered as made for an adequate and full consideration in money’s
worth.” (Sec. 16, RR No. 12-2018)
B.) Definition of "fair market value" of the Shares of Stock.
b.1) “In the case of listed shares which were sold, transferred or exchanged outside of the trading
system and/or facilities of the Local Stock Exchange, the closing price on the day when the
shares are sold, transferred, or exchanged. When no sale is made in the Local Stock Exchange on
the day when the Listed shares are sold, transferred, or exchanged, the closing price on the day
nearest to the date of sale, transfer or exchange of the shares shall be the fair market value.” [Sec.
7 (c.2.1) RR No. 6-2008]
b.2) “In the case of shares of stock not listed and traded in the local stock exchanges, the value of
the shares of stock at the time of sale shall be the fair market value. In determining the value of
the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are
adjusted to fair market values. The net of adjusted asset minus the liability values is the indicated
value of the equity.
The appraised value of real property at the time of sale shall be the higher of –
1.  The fair market value as determined by the Commissioner of Internal Revenue, or
2.  The fair market value as shown in the schedule of valued fixed by the Provincial and City
Assessors, or
3.  The fair market value as determined by Independent Appraiser.” (Sec. 2, RR No. 6-2013)
b.3) In the case of a unit of participation in any association, recreation or amusement club (such
as golf, polo, or similar clubs), the fair market value thereof shall be its selling price or the bid
price nearest published in any newspaper or publication of general circulation, whichever is
higher. [Sec. 7 (c.2.3) RR No. 6-2008]
C.) Determination of Gain or Loss from Sale or Disposition of Shares of Stock. — The gain from
the sale or other disposition of Shares of Stock. — The gain from the sale or other disposition of
shares of stock shall be the excess of the amount realized therefrom over the basis or adjusted
basis for determining gain, and the loss shall be the excess of the basis or adjusted basis for
determining loss over the amount realized. The amount realized from the sale or other
disposition of property shall be the sum of money received plus the fair market value of the
property (other than money) received, if any. [Sec. 7 (c.3) RR No. 6-2008]
16.) What are the applicable tax rates of Capital Gains Tax (CGT) under the National
Internal Revenue Code of 1997, as amended by Republic Act No. 10963/ TRAIN Law?
A.  For Real Properties                  –             Six percent (6%)
B. For Shares of Stocks Not Traded in the Stock Exchange:
Effective January 1, 2018 to present (Republic Act No. 10963 or TRAIN Law)
A.  For Individual                     -              15 % 
B.  For Corporation:
        B.1 Domestic                        -              15 %
        B.2 Foreign:
                   B.2.1   Not Over P100,000                                              -              5.0 %
                   B.2.2   On any amount in excess of P100,000                    -              10 %
Effective January 1, 1998 to December 31, 2017 (Republic Act No. 8424/NIRC)
 Not over P 100,000 – Five percent (5%)
 On any amount in excess of P 100,000 – Ten percent (10%)
17.) Who/what are considered exempt from the payment of Final Capital Gains Tax?
 Dealer in securities, regularly engaged in the buying and selling of securities
 An entity exempts from the payment of income tax under existing investment incentives
and other special laws
 An individual or non-individual exchanging real property solely for shares of stocks
resulting in corporate control
 A government entity or government-owned or controlled corporation selling real property
 If the disposition of the real property is gratuitous in nature
 Where the disposition is pursuant to the CARP law
18.) Who are conditionally exempt from the payment of Final Capital Gains Tax?
Natural persons who dispose their principal residence, provided that the following criteria are
met:
 The proceeds of the sale of the principal residence have been fully utilized in acquiring or
constructing new principal residence within eighteen (18) calendar months from the date
of sale or disposition;
 The historical cost or adjusted basis of the real property sold or disposed will be carried
over to the new principal residence built or acquired;
 The Commissioner of Internal Revenue has been duly notified, through a prescribed
return, within thirty (30) days from the date of sale or disposition of the person’s
intention to avail of the tax exemption;
 Exemption was availed only once every ten (10) years;
 In case there is no full utilization of the proceeds of sale or disposition, the portion of the
gain presumed to have been realized from the sale or disposition will be subject to
Capital Gains Tax.
  In case of sale/transfer of principal residence, the Buyer/Transferee shall withhold from
the seller and shall deduct from the agreed selling price/consideration the 6% capital
gains tax which shall be deposited in cash or manager’s check in interest-bearing account
with an Authorized Agent Bank (AAB) under an Escrow Agreement between the
concerned Revenue District Officer, the Seller and the Transferee, and the AAB to the
effect that the amount so deposited, including its interest yield, shall only be released to
such Transferor upon certification by the said RDO that the proceeds of the
sale/disposition thereof has, in fact, been utilized in the acquisition or construction of the
Seller/Transferor’s new principal residence within eighteen (18) calendar months from
date of the said sale or disposition. The date of sale or disposition of a property refers to
the date of notarization of the document evidencing the transfer of said property. In
general, the term “Escrow” means a scroll, writing or deed, delivered by the grantor,
promisor or obligor into the hands of a third person, to be held by the latter until the
happening of a contingency or performance of a condition, and then by him delivered to
the grantee, promise or obligee.
19.)  What is an Electronic Certificate Authorizing Registration (eCAR)?
The eCAR is an electronically generated Certificate Authorizing Registration issued by the
Commissioner or his duly authorized representative attesting that the transfer and conveyance of
land, buildings/improvements or shares of stock arising from sale, barter or exchange have been
reported and the taxes due inclusive of the documentary stamp tax, have been fully paid.
20.)  What is Electronic Certificate Authorizing Registration System (eCAR System)?
The eCAR System is a stand-alone system developed and owned by the BIR for the automated
creation of eCAR which is the basis for transferring the real and personal properties from the
transferor to the transferee after payment of the correct taxes and other dues that allows
monitoring through audit trails and generated reports.
21.) Are manually issued Certificate Authorizing Registration (CAR) that are outstanding
and not yet presented to the Registry of Deeds (RD) still valid?
All manually issued CARs that are outstanding and not yet presented to the RD are no longer
valid. The said CARs shall be replaced with an eCAR by the concerned Revenue District Offices
or Large Taxpayers Divisions. For CAR involving multiple properties in which some of the
properties are already transferred in RD, only those untransferred property/ies shall be issued
with an eCAR.
A certification fee shall be charged for each released eCAR issued/reprinted after affixture of
Thirty Pesos (P30.00) Documentary Stamp Tax (DST) on Certificates (RA 10963 or TRAIN
Law) and the prescribed Certification Fee of One Hundred Pesos (P100.00) under Executive
Order No. 197 to the taxpayer/authorized representative.

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