CAPITAL GAINS TAX

CAPITAL GAINS TAX FOR ONEROUS TRANSFER OF REAL PROPERTY

CLASSIFIED AS CAPITAL ASSETS (TAXABLE AND EXEMPT)
BIR Form 1706 – Final Capital Gains Tax Return (For Onerous Transfer of Real Property Classified as Capital Assets
-Taxable and Exempt)

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%.

CAPITAL GAINS TAX FOR ONEROUS TRANSFER OF SHARES OF STOCKS NOT
TRADED THROUGH THE LOCAL STOCK EXCHANGE
BIR Form 1707 - Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks Not Traded Through the Local
Stock Exchange)

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%)
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