Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL No, _ 5520

Introduced by
REPRESENTATIVE PANTALEON D. ALVAREZ

AN ACT
PROHIBITING THE IMPOSITION OF THE CAPITAL GAINS TAX
ON THE TRANSFER OF TAX DECLARATION, AMENDING FOR
THE PURPOSE SECTION 24 (D) AND 27 (D) OF REPUBLIC ACT
NO. 8424, AS AMENDED, OTHERWISE KNOWN AS THE
NATIONAL INTERNAL REVENUE CODE OF 1997

EXPLANATORY NOTE

The Tax Code currently imposes a six percent (6%) capital gains
tax (CGT) on individual taxpayers on the sale, exchange or other
disposition of real property based on the gross selling price or current
fair market value, whichever is higher.

Although it should go without saying that the CGT should not be
levied on the transfer of mere tax declarations, unfortunately, there have
been reports of the occurrence of such practice. There is, therefore, an
urgent need to provide a lasting solution through legislation.

Hence, this bill specifically clarifies that the CGT should not be
imposed on the transfer of tax declaration in order to protect the tax
paying public from unnecessary payments.


In view of the foregoing, immediate passage of this bill is earnestly
sought,

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5520

Introduced by
REPRESENTATIVE PANTALEON D. ALVAREZ

AN ACT
PROHIBITING THE IMPOSITION OF THE CAPITAL GAINS TAX
ON THE TRANSFER OF TAX DECLARATION, AMENDING FOR
THE PURPOSE SECTION 24 (D) AND 27 (D) OF REPUBLIC ACT
NO. 8424, AS AMENDED, OTHERWISE KNOWN AS THE
NATIONAL INTERNAL REVENUE CODE OF 1997

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 24(D) of Republic Act No. 8424, as amended,
otherwise known as the National Internal Revenue Code of 1997, is
hereby further amended to read as follows:

“SEC. 24. x x x. =

“(A) XXX

“(B) xxx

“(C)xxx

“(D) Capital Gains from Sale of Real Property. -

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(1)In General. - The provisions of Section 39(B)
notwithstanding, a final tax of six percent (6%) based on
the gross selling price or current fair market value as
determined in accordance with Section 6(E) of this Code,
whichever is higher, is hereby imposed upon capital gains
presumed to have been realized from the sale, exchange,
or other disposition of real property located in the
Philippines, classified as capital assets, including pacto de
retro sales and other forms of conditional sales, by
individuals, including estates and trusts: PROVIDED
THAT TRANSFER OF MERE TAX DECLARATIONS
SHALL NOT BE SUBJECT TO CAPITAL GAINS TAX;
Provided, further, that the tax liability, if any, on gains
from sales or other dispositions of real property to the
government or any of its political subdivisions or agencies
or to government-owned or controlled corporations shall
be determined either under Section 24 (A) or under this
Subsection, at the option of the taxpayer;”

SECTION 2. Section 27(D) of Republic Act No. 8424, as amended,
otherwise known as the National Internal Revenue Code of 1997, is
hereby further amended to read as follows:

“SEC. 27. x x x. -

“(D) Rate of Tax on Certain Passive Incomes -

“(1) Interest from Deposits and Yield or any other Monetary

Benefit from Deposit Substitutes and from Trust Funds and
Similar Arrangements and Royalties. - xxx

“(2) Capital Gains from the Sale of Shares of Stock Not Traded in

The Stock Exchange. - xxx
Page 40f5


“(3) Tax on Income Derived under the Expanded Foreign
Currency Deposit System. - xxx

“(4) Intercorporate Dividends. - xxx

“(5) Capital Gains Realized from the Sale, Exchange or Disposition
of Lands and/or Buildings. - A final tax of six percent (6%) is
hereby imposed on the gain presumed to have been realized
on the sale, exchange or disposition of lands and/or buildings
which are not actually used in the business of a corporation
and are treated as capital assets, based on the gross selling
price of fair market value as determined in accordance with
Section 6(E) of this Code, whichever is higher, of such lands
and/or buildings. PROVIDED, THAT CAPITAL GAINS
TAX SHALL NOT APPLY TO THE TRANSFER OF MERE
TAX DECLARATIONS.”

SECTION 3. Separability Clause - If any of the sections or provisions of
this Act is held invalid, all other provisions not affected thereby shall
remain valid.

SECTION 4. Repealing Clause - All other laws, acts, presidential
decrees, executive orders, issuances, presidential proclamations, rules
and regulations or parts thereof which are contrary to or inconsistent
with any provision of this Act are hereby repealed, amended or
modified accordingly.

SECTION 5. Effectivity - This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in a newspaper of general
circulation.

Approved,

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