Sale of principal residence; VAT on exchange
ON June 14, 2011, a memorandum was issued by Nelson M. Aspe, the Deputy Commissioner of the Operations Group of the Bureau of Internal Revenue (“BIR”), addressed to all Regional Directors and all Revenue District Officers (“RDO”) involving the escrow accounts on Taxpayer’s Sale of “Principal Residence.”
The memorandum basically reminded all appropriate BIR offices on the implementation of Revenue Regulation No. 17-03 which provides that if within 30 days after the lapse of the 18-month period from date of sale/disposition of the principal residence, the seller/transferor fails to submit documentary evidence showing use of the proceeds of sale/disposition of his old principal residence to acquire/construct a new principal residence, he shall be treated as deficient in the payment of the capital gains tax on the sale/disposition of his aforesaid Principal Residence.
He shall be accordingly assessed for deficiency capital gains tax, inclusive of penalties and the 20 percent interest per annum computed from the 31st day after the date of sale/disposition of the principal residence. Thereafter, the RDO shall forthwith apply the escrowed bank deposit account against the deficiency.
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VAT ON EXCHANGE
THE Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 10-2011 amending the Consolidated Value Added Tax (VAT) Regulations of 2005.
Article continues after this advertisementThe VAT shall not be applicable to goods or properties that are originally intended for sale or for use in the course of business in any change of control of a corporation by acquisition of the controlling interest of such corporation by another stockholder, who may be individual or corporate, or a group of stockholders.
Article continues after this advertisementThe goods or properties used in business including those held for lease or those comprising the stock in trade of the corporation having a change in corporate control will not be considered sold, bartered or exchanged despite the change in the ownership interest in the said corporation.
However, the exchange of goods or properties including the real estate properties used in business or held for sale or for lease by the transferor, for shares of stocks, whether resulting in corporate control or not, shall be subject to VAT.
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