Philippines Real Property Taxes PDF

BUSINESS & REAL ESTATE TAXES (Updated under TRAIN Law and Recent BIR Rulings & Regulations) ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC REAL PROPERTY TAX Definition: Real Property Tax (RPT) is the tax on real property due to any indi...

BUSINESS & REAL ESTATE TAXES (Updated under TRAIN Law and Recent BIR Rulings & Regulations) ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC REAL PROPERTY TAX Definition: Real Property Tax (RPT) is the tax on real property due to any individual/entity who/which owns real property in the Philippines as imposed by the Local Government Unit (LGU) where the property is situated. The legal basis is Title II of the Local Government Code (LGC) of Republic Act No. 7160. Who is liable to pay RPT? Any owner of real property in the Philippines. Who should pay the RPT? The owner or administrator of the property/ies. Where shall RPT be paid? At the City or municipal treasurer’s office When to pay the RPT? If you choose to pay for one whole year (one-time payment), the payment is due on or before January 31 of each year. If you choose to pay in installments, the four quarterly installments shall be due on or before the last day of each quarter, namely: March 31, June 30, September 30, and December 31. Is there any discount in the payment of RPT? If the basic RPT and the additional tax accruing to the Special Education Fund (SEF) are paid in advance, the sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due. Is there any penalty for late payment? In case of failure to pay the basic RPT and other taxes when due, the interest at the rate of two percent (2%) per month shall be imposed on the unpaid amount, until fully paid. The maximum number of months is thirty-six (36) months, so effectively, the maximum interest rate is seventy-two percent (72%). Is RPT a lien to the property? The RPT for any year shall accrue on the first day of January and from that date it shall constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatever, and shall be extinguished only upon payment of the delinquent tax. 1|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  If you have prior years’ delinquencies, interests, and penalties, your RPT payment shall first be applied to them. Once they are settled, your tax payment may be credited for the current period. Note: The Local Government Unit shall cause a notice of deficiency and thereafter the property sold at public auction in case of unpaid delinquent real estate taxes. Within one (l) year from date of sale, the delinquent taxpayer or his representative shall have the right to redeem the property. Redemption shall take effect upon payment to the City Treasurer of the total amount of taxes, fees, interest, or penalties, cost of sale, and other related charges, from date of delinquency to the date of sale, plus interest of two (2) percent per month on the purchase price to date of redemption. Such payment shall invalidate the Certificate of Sale issued to the purchaser and shall entitle the owner to a Certificate of Redemption from the City Treasurer. Note: No action for the collection of the real estate tax, whether administrative or judicial, shall be instituted after the expiration of five (5) years. How do you compute real property tax (RPT)? RPT = RPT Rate x Assessed Value What are the RPT rates? Maximum RPT rates: Coverage RPT rate Cities and Municipalities within Metro 2% Manila Provinces 1% Note: The Local Government Units (LGUs) do not only have the power to levy real property taxes but they may also fix real property tax rates. However, the power to fix real property tax rates does not extend to cities/municipalities outside of Metro Manila since it is the Provincial Board which has the power. Special Education Fund (SEF) – 1% In addition to the basic RPT, the LGUs may levy and collect an annual tax of one percent (1%) which shall accrue exclusively to the Special Education Fund (SEF). Note: This is allocated to the local school boards. How do you compute the Assessed Value? Assessed Value = Fair Market Value x Assessment Level Note: Sec. 199 (l) of the LGC defines “Fair Market Value” as the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy. In practice, however, the Fair Market Value is based on the assessment of the municipal or city assessor as written in the Tax Declaration. 2|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  The Assessment Level shall be fixed through ordinances of the Sangguniang Panlalawigan, Sangguniang Panglungsod, or the Sangguniang Pambayan of the municipality within the Metro Manila area. Important: Real property shall be classified for assessment on the basis of its ACTUAL USE. If the property has a mixed usage, that which is the PREDOMINANT USE. Actual Use- refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof. What are the properties exempt from the payment of RPT? 1) Real property owned by the Republic of the Philippines; 2) Real property owned by religious, charitable, educational institutions which is actually, directly and exclusively used for the said purpose; 3) Non-profit or religious cemeteries; 4) Machineries and equipment that are actually, directly and exclusively used by local water district and government owned and controlled corporations engaged in water and electric supply; and 5) Machineries and equipment used for pollution control and environmental protection. Question: A case where a 4 storey building, the 2 nd to the 4th floor is occupied and actually used for educational purposes while the 1st floor is used for full-time commercial operations. Will the predominant use rule be applied and consider the whole building exempt? Answer: No. The land and the building is not used actually, directly and exclusively for educational purposes, the rule on split assessment will be applied. Split assessment- meaning the 1st floor of the building will be classified and assessed separately from the other floors of the building. The 1 st as commercial- taxable and the 2nd to 4th floors- exempt. Maximum Assessment Level rates I. Land Class Assessment Level Timberland 20% Residential 20% Agricultural 40% Commercial 50% Industrial 50% Mineral 50% II. Building and Other Structures 1. Residential FMV Over But Not Over Assessment Level 0.00 175,000.00 0% 3|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  175,000.00 300,000.00 10% 300,000.00 500,000.00 20% 500,000.00 750,000.00 25% 750,000.00 1,000,000.00 30% 1,000,000.00 2,000,000.00 35% 2,000,000.00 5,000,000.00 40% 5,000,000.00 10,000,000.00 50% 10,000,000.00 60% 2. Agricultural FMV Over But Not Over Assessment Level 300,000.00 25% 300,000.00 500,000.00 30% 500,000.00 750,000.00 35% 750,000.00 1,000,000.00 40% 1,000,000.00 2,000,000.00 45% 2,000,000.00 50% 3. Commercial/Industrial FMV Over But Not Over Assessment Level 300,000.00 30% 300,000.00 500,000.00 35% 500,000.00 750,000.00 40% 750,000.00 1,000,000.00 50% 1,000,000.00 2,000,000.00 60% 2,000,000.00 5,000,000.00 70% 5,000,000.00 10,000,000.00 75% 10,000,000.00 80% 4. Timberland FMV Over But Not Over Assessment Level 300,000.00 45% 300,000.00 500,000.00 50% 500,000.00 750,000.00 55% 750,000.00 1,000,000.00 60% 1,000,000.00 2,000,000.00 65% 2,000,000.00 70% II. Machineries Class Assessment Level Agricultural 40% Residential 50% 4|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  Commercial 80% Industrial 80% Sample Computation Data: Actual use of property: Residential Location: City within Metro Manila FMV per assessor’s officer (based on Tax Declaration): Land – PHP350,000.00 Improvement – PHP350,000.00 Assessment Level for Land: 20% Assessment Level for Improvement: 20% Note: The assessment levels are fixed through ordinances of the Sangguniang Panlalawigan, Sangguniang Panglungsod, or the Sangguniang Pambayan of the municipality within the Metro Manila area. We will be using the maximum rates for sample computation purposes. Computation Assessed Value of Land = PHP350,000.00 x 20% = PHP70,000.00 Assessed Value of Improvement= PHP350,000.00 x 20%= PHP70,000.00 Basic Real Property Tax for Land and Improvement = (PHP70,000.00 + PHP70,000.00) x 2% = PHP2,800.00 Special Education Fund (SEF) for Land and Improvement =(PHP70,000.00 + PHP70,000.00) x 1% = PHP1,400.00 Special Classes of Real Property All lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government-owned or controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power. What are the assessment levels for special classes of real property? Actual Use Assessment Level Cultural 15% Scientific 15% Hospital 15% Local water districts 10% Government-owned or controlled 10% corporations engaged in the supply and distribution of water and/or generation and transmission of electric power Ad Valorem Tax on Idle Lands – 5% In addition to the basic RPT, the LGU’s may collect a maximum idle land tax of 5% based on the assessed value of the property. 5|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business What are Idle Lands? 1. Agricultural lands more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery, and other agricultural uses, ½ of which remain uncultivated or unimproved. Exceptions: i. Lands planted to permanent or perennial crops with at least 50 trees to a hectare; & ii. Lands used for grazing purposes (Note: put goats or cows on your property). 2. Lands Other than Agricultural, located in a city or municipality, more than 1,000 sqm. in area, ½ of which remain unutilized or unimproved 3. Residential lots in subdivisions, regardless of land area. CAPITAL GAINS TAX Definition: Capital Gains Tax (CGT) is a final tax on the gain from the sale of capital assets. Capital Gains Tax vs. Income Tax When there is a sale of real estate, automatically people think that they have to pay Capital Gains Tax (CGT). This is not necessarily the case. Regular corporate income tax (RCIT) [for corporations] and regular income tax [for individuals] apply to the sale of ordinary assets while CGT applies to the sale of capital assets. Thus, we first have to determine whether the asset being sold is a capital or an ordinary asset so as to know the proper tax rate to be used and the BIR form to be used, among others. Capital assets vs. Ordinary assets The term “capital assets” is defined negatively in Section 39(A)(1) of the Tax Code as follows: “(1) Capital Assets. – the term ‘capital assets’ means property held by the taxpayer (whether or not connected with his trade or business), but does not include: stock in trade of the taxpayer or other 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 property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property used in the trade or business, of a character which is subject to the allowance for depreciation provided in Subsection (F) of Section 34; or real property used in trade or business of the taxpayer.” As applied to the real estate industry, the terms “capital assets” and “ordinary assets” are defined in Section 2(c) of Revenue Regulations (RR) No. 7-2003 dated December 27, 2002. It’s essentially the same as the above definition. Important: It has an additional provision, though, on real properties acquired by banks through foreclosure sales – the same are considered as their ordinary assets but banks shall not be considered as habitually 6|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business engaged in the real estate business for purposes of determining the applicable rate of expanded withholding tax. Since we are talking about the sale of real property here, we need to know the definition of “real property”. Section 2(c) of RR No. 7-2003 states that “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.” Article 415 of the Civil Code provides: “Art. 415. The following are immovable property: (1) Land, buildings, roads and constructions of all kinds adhered to the soil; (2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; (4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements; (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; (6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included; (7) Fertilizer actually used on a piece of land; (8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant; (9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast; (10) Contracts for public works, and servitudes and other real rights over immovable property.” Thus, it appears that it is not only the sale of land and buildings or houses which we should be focusing on, but also the sale of the above. In simple terms, if the property is not ordinarily held for sale (as inventory) or used in business and subject to depreciation, then the property is a capital asset. Now, if a seller is engaged in the real estate business, and the property is one he holds out for sale to the public, then the property may be considered as an ordinary asset. Conversely, if a seller is not engaged in the real estate business, and the property is not used in business and subject to depreciation, the property may be considered as a capital asset, the sale of which is subject to CGT. Section 3 of RR No. 7-2003 provides the Guidelines in Determining Whether a Particular Real Property is a Capital Asset or Ordinary Asset. 7|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business What is the tax rate of CGT? The tax rate of CGT is 6%. What is the tax base of CGT? The tax base of CGT is 1) gross selling price; or 2) fair market value (FMV) based on the assessor’s value; or 3) zonal value as provided by the BIR, whichever is higher. Remember BSM! Technically, it’s not really only the gain (selling price less cost) which is taxed, because even if the seller suffered a loss (that is, the selling price is lower than the original acquisition cost of the property), there will still be CGT, because a gain is always presumed. On the other hand, if the seller is engaged in the real estate business, and the real property sold is an ordinary asset, the sale will be subject to RCIT [or minimum corporate income tax (MCIT), when applicable] if the taxpayer is a corporation and income tax if the seller is an individual. The proceeds from the sale of the real property will be included in the seller’s global income (meaning income from all sources – note that domestic corporations and resident citizens are taxed on all sources of income, whether from within or outside the country) and only the net income, after allowable deductions such as depreciation, losses, etc. will be subjected to RCIT, MCIT, or regular income tax, whichever is applicable. BIR form, deadline of payment and procedure Assuming that you are interested in buying a property from a seller who is an individual and who is not engaged in the real estate business, the seller needs to pay CGT on the sale of his real property, unless you have made an agreement that you as the buyer will shoulder this. The seller needs to file BIR Form No. 1706 within thirty (30) days after each sale, exchange, transfer or other disposition of real property. Documentary Requirements 1) One original copy and one photocopy of the Notarized Deed of Sale or Exchange 2) Cert. True Copy of the Transfer Certificate of Title; Original Certificate of Title; or Condominium Certificate of Title 3) Certified True Copy of the tax declaration on the lot and/or improvement during nearest time of sale 4) “Certificate of No Improvement” issued by the Assessor’s office where the property has no declared improvement, if applicable or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees 5) Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable 6) Duly approved Tax Debit Memo, if applicable 7) “Sworn Declaration of Interest” as prescribed under Revenue Regulations 13-99, if the transaction is tax-exempt 8) Documents supporting the exemption Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures. 8|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business How to File the Capital Gains Tax Return 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 Office (RDO) where the property is located, along with the documentary requirements and the tax due. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer. Deadline for the filing and payment of CGT CGT shall be paid within thirty (30) days from notarization of deed of absolute sale or of whatever deed of conveyance for exchange, transfer or other disposition of real property. Surcharge for the late payment of Capital Gains Tax For late payment of CGT, there is a 25% surcharge based on the applicable tax base (50% if fraudulent), and 20% interest. Samp le CGT computation A residential condominium in Makati City with a floor area of 50sqm has a Gross Selling Price (GSP) of PHP 1,000,000.00. The existing zonal value per square meter for that condo in Makati is currently PHP50,000.00/sqm. You have called the owner and found out that he is not engaged in the real estate business. He also told you that as part of the deal, the buyer shall shoulder the CGT. As the buyer, how much is the CGT which you will have to pay the seller on top of the selling price? First let’s compute for the Zonal Value: Zonal value= Zonal Value per sqm x Floor Area (sqm) =PHP50,000.00/sqm x 50sqm =PHP2,500,000.00 Since Zonal Value is higher than GSP, we shall use Zonal Value to compute the CGT: CGT= 6% x FMV = 0.06 x PHP2,500,000.00 =PHP150,000.00 Therefore, the buyer shall have to shell out an additional PHP150,000.00. Note that while technically, the CGT is always the responsibility of the seller, it is not prohibited under any law that the responsibility to shoulder the same can be given to the buyer. Corollary, if the buyer shoulders the CGT, it is in effect part of the selling price to be compared to FMV for purposes of computing the 6% CGT. Now, what if the buyer is willing to purchase the property and he wants the seller to shoulder the capital gains tax, however the seller made a counter offer that he is willing to shoulder the CGT only up to his selling price and the buyer shall shoulder the CGT for the excess or the difference between the GSP and FMV, how do you compute for the CGT? 9|P a ge ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  First, let’s compute for the excess or difference between the GSP and the FMV: Excess=FMV-GSP =PHP2,500,000.00 – PHP1,000,000.00 =PHP1,500,000.00 Now, let’s compute for the CGT to be shouldered by the buyer: CGT for the buyer =6% x Excess =0.06 x PHP1,500,000.00 =PHP90,000.00 The CGT to be shouldered by the seller is as follows: CGT=6% x GSP =0.06 x PHP1,000,000.00 =PHP60,000.00 Take note that the total CGT is PHP90,000.00 + PHP60,000.00 = PHP150,000.00, which is consistent with our first computation. The CGT was just split between the buyer and the seller. The seller will still be the one to file the CGT and he shall have to file the return in an Authorized Agent Bank within the Revenue District where the property is located in Makati, within 30 days the deed of sale was executed. Exception to the application of the CGT Sale or Disposition of Principal Residence - A sale or disposition of principal residence by natural person, the proceeds of which are fully utilized in acquiring or constructing a new principal residence within eighteen (18) months from the sale thereof, shall be exempt from the payment of CGT. - Section 2(2) of Revenue Regulations (RR) No. 13-99, as amended by RR No. 14-00, defines “principal residence” as: “the dwelling house, including the land on which it is situated, where the husband and wife or an unmarried individual, whether or not qualified as head of family, and members of his family reside. Actual occupancy of such principal residence shall not be considered interrupted or abandoned by reason of the individual’s temporary absence therefrom due to travel or studies or work abroad or such other similar circumstances. Such principal residence must be characterized by permanency in that it must be the dwelling house in which, whenever absent, the said individual intends to return.” Please note that as per RR 14-00. the residential address shown in the latest income tax return filed by the vendor/transferor immediately preceding the date of sale of the said real property shall be treated as a conclusive presumption about his true residential address. Requisites: - 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; 10 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business - The Commissioner 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; - If 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. Note: 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. How to compute for CGT if there is an unutilized portion of the proceeds of principal residence? If the seller fails to utilize the proceeds of sale or disposition in full or in part within the 18-month reglementary period, his right of exemption from the capital gains tax did not arise to the extent of the unutilized amount, in which event, the tax due thereon shall immediately become due and demandable on the 31st day after the date of the sale, exchange or disposition of principal residence. As such, he shall file his capital gains tax return covering the sale, exchange or disposition of his principal residence and pay the deficiency capital gains tax inclusive of the twenty five percent (25%) surcharge for late payment of the tax plus twenty percent (20%) delinquency interest per annum incident to such late payment computed on the basis of the basic tax assessed. The interest shall be imposed from the thirty-first (31st) day after the date of the sale of principal residence until the date of payment, provided, that the date of sale shall mean the date of notarization of the document of sale, exchange, or disposition of principal residence. Illustrations: In case the proceeds from the sale of his old principal residence has not been fully utilized to acquire his new principal residence. — If Mr. Buendia acquired his new principal residence within the 18-month reglementary period but did not, however, utilize the entire proceeds of the sale in acquiring his new principal residence because he only used P3,000,000 thereof in acquiring his new principal residence, that portion of the gross selling price not utilized in the acquisition or construction of his new principal residence shall be subject to capital gains tax. 11 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  Computations: Historical cost of old principal residence P1,000,000.00 Gross selling price (GSP) P4,000,000.00 Fair market value (FMV) of old principal residence P5,000,000.00 Cost to acquire new principal residence P3,000,000.00 To compute for the capital gains tax due, the following formula shall be used in determining capital gains tax due on the taxable portion pertaining to the unutilized amount of the proceeds of sale: Unutilized Portion of GSP of Old Principal Residence ___________________ x GSP or x Capital FMV of Old gains Principal tax GSP of Old Principal Residence, rate Residence whichever is higher = (PHP4,000,000.00 -– PHP3,000,000.00) _________________________ x PHP5,000,000.00 x 6% PHP4,000,000.00 = 25% x PHP5,000,000.00 x 6% = PHP75,000.00.00 CREDITABLE WITHOLDING TAX Definition: Creditable withholding tax (CWT) is the tax which is withheld by the buyer/withholding agent from his payment to the seller for the sale of the seller’s ordinary asset/services, and which tax is creditable against the income tax payable of the seller. Background on the Withholding Tax System We all know that the ordinary income of a person/corporation is subject to regular income tax. Under the withholding tax system, the government 12 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  gives the buyer the responsibility to withhold a certain percentage of his payment to the seller and remit the same to the government. Thus, the amount remitted by the buyer to the seller is less than the purchase price. The buyer should provide the seller with BIR Form No. 2307 (Certificate of Creditable Taxes Withheld) which states the amount of the taxes he withheld. The tax withheld is called the withholding tax and the buyer in this case is called a withholding agent. Note: This only applies to the ordinary income of the seller, as opposed to his capital gain. What is the rationale for this system? To put it simply, the tax withheld by the buyer acts as the advanced payment of the seller’s taxes. Since the seller will only pay income taxes on a quarterly basis, and the government spends all throughout the year, it would be difficult for the government to operate if it only gets income taxes quarterly. Also, since the buyer withholds only a small percentage of the seller’s gross receipts (let’s say 2%), the government is alerted that the seller realized income to the extent of the grossed-up amount of the taxes withheld. For example, PHP2,000.00 which pertains to 2% withholding tax means that the seller sold PHP100,000.00 worth of assets/services for which he should pay income taxes. When the time comes for the payment by the seller of his income taxes, and he doesn’t declare the income from which the buyer withheld taxes, a discrepancy will arise and the government will have a tip to investigate whether the seller is paying the correct taxes. On the part of the buyer, he must withhold taxes, otherwise, he will not be able to deduct his expense. For example, if his expense is PHP100,000.00 and he is required to withhold 2% of this or PHP2,000.00 and he does not withhold and remit this amount, for income tax computation purposes, he may not deduct his PHP100,000 expense from his taxable income. Thus, if his gross income is PHP200,000.00 and he may not deduct the PHP100,000.00 expense (assuming there are no other deductible expenses), he will pay taxes based on a net income of PHP200,000.00 instead of Php100,000.00. On the part of the seller, since the taxes withheld act as his advanced payment of his income tax, when the time comes for the quarterly payment of income taxes, he will subtract the tax withheld from his income tax payable. For example, if his income tax payable is PHP32,000.00 and the tax withheld from him is PHP2,000.00, then he will only pay PHP30,000.00 income tax. As proof of the taxes withheld, he should attach the BIR Form No. 2307 (Certificate of Creditable Taxes Withheld) provided by the buyer to his income tax return. Creditable Withholding Taxes on Real Estate Transactions As earlier noted, this only applies to the sale of real estate which are ordinary assets of the seller. Thus, when the real estate sold is a capital asset to the seller, his income from the sale of real estate will be subject to capital 13 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  gains tax, and no creditable withholding tax shall be imposed on the transaction. Going now to the creditable withholding tax base, the withholding agent/buyer is required to withhold a creditable withholding tax based on the higher of the following: a) gross selling price/total amount of consideration, or b) the fair market value determined in accordance with Section 6(E) of the Code. Under Section 2.57.2 (J) of Revenue Regulations (RR) No. 2-98, as amended by RR No. 6-2001, the percentages of taxes to be withheld are as follows: a. Upon the following values of real property where the seller /transferor is habitually engaged in the real estate business as per proof of registration with the HLURB (DHSUD) or the HUDCC or other satisfactory evidence (for example, he/it consummated during the preceding year at least six taxable real estate transactions, regardless of amount): a)With a selling price of Five Hundred Thousand Pesos 1.5% (P500.000.00) or less b)With a selling price of more than Five Hundred Thousand Pesos but not more than Two Million Pesos (more than 3.0% 500,000 but not more than 2,000,000.00) c)With a selling price of more than Two Million Pesos 5.0% (2,000,000.00) b. Where the seller/transferor is not habitually engaged in the real estate business (but the real estate sold is an ordinary 6.0% asset) c. Where the seller/transferor is exempt from creditable withholding tax in accordance with Section 2.57.5 of Revenue Regulations No. 2-98 [When the seller is exempt from income taxes. As earlier noted, the creditable taxes withheld Exempt serve as advance payment of income taxes. So when a seller is tax-exempt, it follows that no tax should be withheld from his income.] Note: The sale of foreclosed properties by banks is subject to creditable withholding tax of 6% because banks are not considered as habitually engaged in the real estate business, and properties acquired by banks through foreclosure sales are considered as ordinary assets pursuant to Revenue Regulations No. 7-2003. Time and Place of Payment of Creditable Withholding Tax a. General Rule Section 4 of RR No. 004-08 dated February 19, 2008 provides for the time and place of payment of creditable withholding tax and DST on the sale, exchange or other mode of onerous disposition of real properties classified as ordinary assets. Creditable withholding taxes deducted and withheld by the withholding agent/buyer on the sale, transfer or exchange of real property classified as 14 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business ordinary asset, shall be paid by the withholding agent/buyer upon filing of the return with the Authorized Agent Bank (AAB) located within the Revenue District Office (RDO) having jurisdiction over the place where the property being transferred is located within ten (10) days following the end of the month in which the transaction occurred. The creditable withholding tax return is BIR Form 1606. Taxes withheld in December shall be filed on or before January 15 of the following year. Please note that this is subject to the rules prescribed by Electronic Filing and Payment System (EFPS) regulations in case the taxpayer is an EFPS taxpayer. Rules under Section 2.57.2 (J) of Revenue Regulations (RR) No. 2-98, as amended by RR No. 17-2003, in cases where the buyers are engaged or not engaged in trade or business: b. Buyer is not engaged in trade or business 1. Installment Sale Under Section 2.57.2 (J) of Revenue Regulations (RR) No. 2-98, as amended by RR No. 17-2003, if the sale is a sale of property on the installment plan (i.e., payments in the year of sale do not exceed twenty five percent (25%) of the selling price), no withholding is required to be made on the periodic installment payments. In such a case, the applicable rate of tax based on the gross selling price or fair market value of the property at the time of the execution of the contract to sell, whichever is higher, shall be withheld on the last installment or installments immediately prior to such last installment, if the last installment is not sufficient to cover the tax due, to be paid to the seller until the tax is fully paid. 2. Cash Basis or Deferred Payment Sale Not on the Installment Plan If the sale is on a “cash basis” or is a “deferred-payment sale not on the installment plan” (that is, payments in the year of sale exceed 25% of the selling price), the buyer shall withhold the tax based on the gross selling price or fair market value of the property, whichever is higher, on the first installment. c. Buyer is engaged in trade or business 1. Installment Sale If the sale is a sale of property on the installment plan [i.e., payments in the year of sale do not exceed twenty five percent (25%) of the selling price], the tax shall be deducted and withheld by the buyer from every installment which tax shall be based on the ratio of actual collection of the consideration against the agreed consideration appearing in the Contract to Sell applied to the gross selling price or fair market value of the property at the time of the execution of the Contract to Sell, whichever is higher. 2. Cash Basis or Deferred Payment Sale Not on the Installment Plan If the sale is on a “cash basis” or is a “deferred-payment sale not on the installment plan” (that is, payments in the year of sale exceed 25% of the selling price), the buyer shall withhold the tax based on the 15 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  gross selling price or fair market value of the property, whichever is higher, on the first installment. In any case, no Certificate Authorizing Registration (CAR)/Tax Clearance Certificate (TCL), shall be issued to the buyer unless the withholding tax due on the sale, transfer, or exchange of real property has been fully paid. For the sale of property on installment basis or deferred payment basis where the Contract to Sell is always executed before the execution of the Deed of Absolute Sale, the said Contract to Sell must be attached to the Deed of Absolute Sale executed upon completion of the payments and the duly notarized original duplicate copy of both documents must be presented to the RDO having jurisdiction of the place where the property is located for validation of the correctness of issuance of CAR/TCL. If upon completion of the payment of the purchase price of real property classified as ordinary asset, but before the execution of the Deed of Sale, the buyer decides to assign his right over the property to another person for a consideration, the assignment shall be considered a separate sale of real property and, therefore, subject to the creditable/expanded withholding tax (EWT) or final withholding of capital gains tax, as the case may be, which shall be withheld by the assignee of such property based on the consideration per Deed of Assignment or the fair market value of such property at the time of assignment, whichever is higher, and to the DST imposed under Sec. 196 of the same Code using the same basis. It is to be clarified, however, that sale of interest in real property (real property purchased on installment covered by Contract to Sell which was sold by the original buyer before it was fully paid) shall be taxable on the part of the original buyer (now seller) based on the realized gain thereon which is measured by the difference between the agreed consideration and the amount actually paid by the said original buyer. Sample Computation: Mr. Jun Piyo is engaged in the business of selling real estate in the Philippines. Recently, he sold one of his subdivision house and lot in Cavite for PHP 10,000,000.00 to Atty. Barry “Hindi Bobo” Gadon. The market value as per the zonal value of the BIR in the said house and lot is Php 12,000,000.00 The latter has to withhold a Creditable Withholding Tax (CWT) in the amount of? Formula: 16 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business Withholding Tax on Rentals Withholding tax on rentals of real and personal properties shall have a tax rate of 5% based on the gross rental. Withholding Tax of Real Estate Service Practitioners Under Revenue Regulation 11-2018, Section 2.57.2 states: “SECTION 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: (A) Professional fees, talent fees, etc. for services rendered – On the gross professional, promotional, and talent fees or any other form of remuneration for the services rendered by the following: Individual payee: If gross income for the current year did not exceed ₱3M - Five percent (5%); If gross income is more than ₱3M - Ten percent (10%) Non-individual payee: If gross income for the current year did not exceed ₱720,000-Ten percent (10%); If gross income exceeds ₱720,000 - Fifteen percent (15%) (1) Those individually engaged in the practice of profession or callings; lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentist; professional appraisers; connoisseurs of tobacco; actuaries; interior decorators, designers, real estate service practitioners (RESP), (i.e. real estate consultants, real estate appraisers and real estate brokers) requiring government licensure examination given by the Real Estate Service pursuant to Republic Act No. 9646 and all other profession requiring government licensure examination regulated by the Professional Regulations Commission, Supreme Court, etc. Xxx (10) Income Payments to certain brokers and agents [formerly under letter (G)]– on gross commissions of customs, insurance, stock, immigration and commercial brokers, fees of agents of professional entertainers and real estate service practitioners (RESPs), (i.e. real estate consultants, real estate appraisers and real estate brokers) who failed or did not take up the licensure examination given by and not registered with the Real Estate Service under the Professional Regulations Commission. xxx” TRANSFER TAX Definition: A transfer tax is imposed on tax on the sale, donation, barter, or any other mode of transferring ownership or title of real property at the maximum rate of 50% of 1% (75% of 1% in the case of cities and municipalities within Metro Manila) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in 17 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  the transfer is not substantial, whichever is higher. This is pursuant to Section 135 of the Local Government Code of 1991 (LGC). There is a need to pay the transfer tax since the evidence of its payment is required by the Register of Deeds of the province concerned before registering any deed for the purpose of transfer of title. This is also required by the provincial assessor before cancelling an old tax declaration and issuing a new one in its place. Note: Please do not confuse the transfer tax which is paid to the local government with the transfer taxes due to the BIR (which may either be donor’s or estate taxes). Who should pay Transfer tax? The payment of the transfer tax is the responsibility of the seller, donor, transferor, executor or and administrator. When to pay Transfer tax? The deadline for payment is sixty (60) days from the date of the execution of the deed or from the date of the decedent’s death. Surcharges and penalties for late payments (as per section 168 of RA 7160) ▪ Surcharge – No more than twenty-five percent (25%) of the amount of taxes, fees or charges not paid on time ▪ Penalty – No more than two percent (2%) per month of the unpaid taxes, fees or charges including surcharges, until such amount is fully paid, but not to exceed thirty-six (36) months or seventy-two percent (72%). Where to pay The transfer tax is to be paid at the Treasurer’s Office of the city or municipality where the property is located. Requirements In general, the requirements for the payment of transfer tax are the following: ▪ Certificate Authorizing Registration from the Bureau of Internal Revenue; ▪ Realty tax clearance from the Treasurer’s Office and RPT payment with OR; and ▪ Official receipt of the Bureau of Internal Revenue (for documentary stamp tax and capital gains tax or estate tax). Transfer Tax Rates and Base “SECTION 135. Tax on Transfer of Real Property Ownership. (a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of the one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher.xxx” 18 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  Note: You have to check the rates on a per city or per municipality basis as the LGC only provides for the maximum rates. Sample Computation A residential condominium in Makati with a floor area of 50sqm was sold with a Gross Selling Price (GSP) of PHP2,000,000.00. The existing market value as per Tax Declaration is currently at PHP1,000,000.00. Since GSP is higher than the Market Value, we shall use GSP to compute the transfer tax: Makati City Transfer Tax Rate: 0.50% [that is, 50% of 1%] Transfer Tax = 0.50% x PHP2,000,000.00 = PHP10,000.00 What if you don’t agree with the Treasurer’s computation? Assuming you disagree with the tax assessment made by a local treasurer, you may file a written protest thereof pursuant to Section 195 of the LGC, which provides: “SECTION 195. Protest of Assessment. — When the local treasurer or his duly authorized representative finds that the correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The local treasurer shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse of the sixty-day (60) period prescribed herein within which to appeal with the court of competent jurisdiction, otherwise the assessment becomes conclusive and unappealable.” ______________________________________________________________________________ DOCUMENTARY STAMP TAX Definition: Documentary Stamp Tax (DST) is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto. What is the BIR Form used in filing DST? For filing and payment of DST on sale or transfer of real property, the form to be used is BIR Form No. 2000-OT (Documentary Stamp Tax Return/Declaration for One Time Transactions). One time transactions 19 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  include transfer of Real Property classified as capital asset, transfer of Real Property classified as ordinary asset, and transfer of shares of stock not traded through the local stock. Who are required to file BIR Form 2000-OT? This return shall be filed in triplicate by the following person making, signing, issuing, accepting or transferring the document or facility evidencing transaction: 1. 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 asset , not traded in the local stock exchange; 2. Every withholding agent/buyer/seller on the sale, transfer or exchange of real property classified as capital asset. The “sale” includes pacto de retro sale and other forms of conditional sale; and 3. Every withholding agent/buyer/seller on the sale, transfer or exchange of real property classified as ordinary asset. Note: Whenever one party to the taxable document enjoys exemption from the tax herein imposed, the other party thereto who is not exempt shall be the one directly liable for the tax. DST on the sale of real property “Section 69. Section 196 of the Tax Code, as amended, is hereby further amended to read as follows: SEC. 196. Stamp Tax on Deeds of Sale and Conveyances of Real Property. — On all conveyances, deeds, instruments, or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any land, tenement or other realty sold shall be granted, assigned, transferred or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax, at the rates herein below prescribed, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6(E) of this Code, whichever is higher: Provided, That when one of the contracting parties is the Government, the tax herein imposed shall be based on the actual consideration: (a) When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any encumbrance, does not exceed One thousand pesos (P1,000), Fifteen pesos (P15.00). (b) For each additional One thousand pesos (P1,000), or fractional part thereof in excess of One thousand pesos (P1,000) of such consideration or value, Fifteen pesos (P15.00). Transfers exempt from donor’s tax under Section 101 (a) and (b) of this Code shall be exempt from the tax imposed under this Section. When it appears that the amount of the documentary stamp tax payable hereunder has been reduced by an incorrect statement of the consideration in any conveyance, deed, instrument or writing subject to such tax the Commissioner, provincial or city Treasurer, or other revenue officer shall, from the assessment rolls or other reliable 20 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  source of information, assess the property of its true market value and collect the proper tax thereon.” Sample computation: A residential property in Pasig City with a floor area of 200sqm has a Gross Selling Price of PHP3,000,000.00. The Deed of Absolute Sale stipulated that the buyer shall shoulder DST. The following are the fair market value information of the real property: 1. Fair Market Value as determined by BIR Commissioner (Zonal Value/BIR Rules): 1a. Land: PHP1,600,000.00 (let us say BIR Zonal value is PHP8,000.00/sqm [200sqm x PHP8,000.00/sqm=PHP1,600,000.00]) 1b. Improvement: PHP1,300,000.00 (not determined by BIR) 2. Fair Market Value as determined by Provincial/City Assessor’s (per latest Tax Declaration): 2a. Land: PHP1,400,000.00 2b. Improvement: PHP1,300,000.00 Question: How much is the DST? Answer/solution: Step 1. Determine the highest fair value (FMV): Total FMV1 (1a + 1b): PHP2,800,000.00 Total FMV2 (2a + 2b): PHP2,700,000.00 Total FMV3 (1a + 2b): PHP2,900,000.00 Total FMV4 (2a + 1b): PHP2,600,000.00 The Highest FMV is FMV3: PHP2,900,000.00. This is the FV we will use in the step 2. Step 2. Determine the higher between FMV and Selling Price: FMV = PHP2,900,000.00 Selling Price = PHP3,000,000.00 The higher value is the selling price PHP3,000,000.00 This is our tax base for computing DST. Step 3. Calculate DST. DST = PHP3,000,000.00 x 1.5% DST = PHP45,000.00 DST on loan agreements If you will be taking out a loan, another type of DST may be imposed. Section 55 of the TRAIN Law amended Sec. 179 of the Tax Code which provides for the DST on loan agreements, as follows: “SEC. 55. Section 179 of the NIRC, as amended, is hereby further amended to read as follows: SEC. 179. Stamp Tax on All Debt Instruments. — On every original issue of debt instruments, there shall be collected a documentary stamp tax on One peso and fifty centavos (P1.50) on each Two hundred pesos (P200), or fractional part thereof, of the issue price of any such debt instruments: Provided, That for such debt instruments with terms of less than one (1) year, the documentary stamp tax to be collected 21 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  shall be of a proportional amount in accordance with the ratio of its term in number of days to three hundred sixty-five (365) days: Provided, further, That only one documentary stamp tax shall be imposed on either loan agreement, or promissory notes issued to secure such loan.” For purposes of this section, the term debt instrument shall mean instruments representing borrowing and lending transactions including but not limited to debentures, certificates of indebtedness, due bills, bonds, loan agreements, including those signed abroad wherein the object of contract is located or used in the Philippines, instruments and securities issued by the government of any of its instrumentalities, deposit substitute debt instruments, certificates or other evidences of deposits that are either drawing interest significantly higher than the regular savings deposit taking into consideration the size of the deposit and the risks involved or drawing interest and having a specific maturity date, orders for payment of any sum of money otherwise than at sight or on demand, promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.” DST on loan agreements (which may be taken out in order to purchase real property ) is thus computed as P1.50 for every P200.00. To compute the DST, divide the loan amount by PHP200.00, then round off the amount to next higher number if there are decimals. As a shortcut, multiply the loan amount by.0075 and round off the amount to next higher number if there are decimals. DST on lease agreements If you will be leasing out your property, DST will be imposed at the rate of Php6.00 for the first Php2,000.00 and an additional Php2.00 for every Php1,000.00 in excess of the first Php2,000.00 pursuant to Section 67 of the TRAIN Law, to wit: “SEC. 67. Section 194 of the NIRC, as amended, is hereby further amended to read as follows: Section 194. Stamp tax on Leases and Other Hiring Agreements. – On each lease, agreement, memorandum, or contract for hire, use or rent of any lands or tenements, or portions thereof, there shall be collected a documentary stamp tax of Three pesos (P6.00) for the first Two thousand pesos (P2,000), or fractional part thereof, and an additional One peso (P2.00) for every One Thousand pesos (P1,000) or fractional part thereof, in excess of the first Two thousand pesos (P2,000) for each year of the term of said contract or agreement.” To compute DST, multiply the monthly rent by 12 months and then by the number of years stated in the contract. Subtract Php2,000.00 and multiply the amount by.002, then add Php6.00. For example, the monthly rent is PHP10,000.00, and the contract is for three (3) years. The DST is computed as follows: Monthly rent PHP10,000.00 Multiply by 12 months PHP10,000.00 x 12= Annual rent of PHP120,000.00 22 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  Multiply by 3 years PHP 120,000.00 x 3= Total contract amount of Php360,000.00 Subtract PHP2,000.00 PHP360,000.00 – PHP2,000.00 = PHP358,000.00 Multiply this by.002 PHP358,000.00 x.002 = PHP716.00 Plus PHP6.00 PHP716.00 + PHP6.00= DST of PHP722.00 DST on mortgages “Section 68. Section 195 of the NIRC, as amended, is hereby further amened to read as follows: Section 195. Stamp Tax on Mortgages, Pledges and Deeds of Trust. – On every mortgage or pledge of lands, estate, or property, real or personal, heritable or movable, whatsoever, where the same shall be made as a security for the payment of any definite and certain sum of money lent at the time or previously due and owing of forborne to be paid, being payable and on any conveyance of land, estate, or property whatsoever, in trust or to be sold, or otherwise converted into money which shall be and intended only as security, either by express stipulation or otherwise, there shall be collected a documentary stamp tax at the following rates: (a) When the amount secured does not exceed Five thousand pesos (P5,000), Twenty pesos (P40.00). (b) On each Five thousand pesos (P5,000), or fractional part thereof in excess of Five thousand pesos (P5,000), an additional tax of Ten pesos (P20.00).” To compute DST, subtract PHP5,000.00 from the contract amount, then divide what’s left by PHP5,000.00 and round off any decimal to the higher number. Multiply this by 20 then add Php40.00. To illustrate, if the amount secured is PHP106,000.00, the DST is computed as follows: Amount secured PHP106,000.00 Subtract PHP5,000.00 = PHP101,000.00 Divide by PHP5,000.00 = PHP20.20 Round off to higher number = PHP21 Multiply by 20 = PHP420.00 Add 40 = PPH460.00 DST Deadline for filing the DST return Under Revenue Regulations (RR) No. 5-2009 dated March 16, 2009, the DST Return (BIR Form No. 2000-OT) shall be filed within five (5) days after the close of the month when the taxable document was made, signed, accepted or transferred. For example, the DST on a taxable document signed on April 15, 2009 will be due on May 5, 2009. Venue for filing the DST return The DST due shall be paid at the same time the aforesaid return is filed with the AAB having jurisdiction over the place where the property being transferred is located based on the consideration contracted to be paid 23 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business  for such realty or on its fair market value determined in accordance with Section 6(E) of the Tax Code, whichever is higher. ______________________________________________________________________________ TAX ON NON-REDEMPTION OF PROPERTIES UNDER INVOLUTARY SALES In case of non-redemption of properties sold during involuntary sales, regardless of the type of proceedings and the personalities of the mortgagees/ selling persons or entities, here are the following rules under Revenue Regulation 9-2012: Subject property is a Capital Asset: Capital Gains Tax (CGT) within thirty (30) days from the expiration of the applicable statutory redemption period. Documentary Stamp Tax (DST) within five (5) days after the close of the month after the lapse of the applicable statutory redemption period. Subject property is an Ordinary Asset: Creditable Withholding Tax (CWT) return within ten (10) days after the close of the month after the lapse of the applicable statutory redemption period. Value-Added Tax (VAT) on or before the 20th (monthly) or 25th (quarterly) of the month following the right of redemption prescribes. Documentary Stamp Tax (DST) within five (5) days after the close of the month after the lapse of the applicable statutory redemption period. Tax Base The tax base for the abovementioned taxes shall be the Bid Price (price of the highest bidder) or BIR Zonal Value or Market Value of the assessor whichever is higher. BBM Xxx NOTHING FOLLOWS xxX 24 | P a g e ATTY. ROLANDO B. PAGTOLON-AN, REB, REA, REC iACADEMY School of Business