RMO No. 25-2016 — Supplements the rules on the investigation of parties in transactions involving transfer/assignment/sale of properties

BUREAU OF INTERNAL REVENUE

RECORDS MGT. DIVISION

BUREAU OF INtERNAL REVEnUE REPUBLIC OF THE PHILIPPINES DEPArMent OF FINANCE Quezon City RECEIVED JUN 14 2016 8:43A.M 1Na

June 12, 2016

REVENUE MEMORANDUM ORDER NO._&5- D!%

SUBJECT Properties. Supplemental Rules on the Matter of Prescribing the Investigation of Parties in Transactions Involving the Transfer/Assignment/Sale of

TO All Revenue Officials, Personnel and Others Concerned

This Revenue Memorandum Order is being issued as a supplement to the guidelines and

provided for in Revenue Memorandum Order No. 24-2016. procedure in the conduct of investigation on the capacity of a party/ies to acquire properties

Memorandum Order No. 24-2016 , and said subsection shall now read as follow: A paragraph shall be added to Section I Guidelines and Procedures (ii)(b) of Revenue

"b. Financial capacity of the buyer to acquire the Subject Property shall be determined during the application of CARs and TCLs.

If the buycr/transferee is proven to have no financial capacity to acquire the Subject Property, the transaction is not a sale but a donation and donor's tax should be imposed and not capital gains tax, and a duly executed Deed of Donation shall be required.

However, if the seiler/transferor/assignor is a corporation or is a_stranger to buyer/trausferee/assignee cannot show proof that he/she/it has the financial capacity for, on the taxable year when the sale/transfer/assignment of the the buyer/trarsferee._of the Subject Propertv, and it is proven that the buyer/transferee/assignee does not have any financial capacity to purchase the Subject Property, it shall be presumed that the buyer/transferee/assignee have earned income that he/she/it did_not declare and taxes due thereon the.. Subiect...Property,.income...taxes..shall...be..assessed.against...the.. buyer/transferee/assignee_on that amount_of the consideration_for which where not paid...In addition to any tax due on the sale/transfer/assignment of

Subiect Property occurred."

This Order shall take effect immediately.

Commissioner of Internal Revenue KIM S. JACINTO-HENARES 042076