Kim-Henares-BIR
Revenue Memorandum Order 24-2016 is said
"to ensure the tax compliance of the parties" involved in property
sale and transfer.
Prinz Magtulis (philstar.com) - June 9,
2016 - 5:30pm
MANILA, Philippines — Property buyers
and sellers could be subjected to a tax probe under a new order from the Bureau
of Internal Revenue (BIR) which wants to gauge their financial capacity to keep
and acquire real estate.
Issued less than a month before the new
administration takes over, Revenue Memorandum Order 24-2016 is said "to
ensure the tax compliance of the parties" involved in property sale and
transfer.
"Parties to the said transactions
may be subjected to an audit or investigation to determine their capacity to
hold and/or acquire properties," the order dated June 7 stated.
"In all cases (however),
verify...that the parties (seller/assignor/transferor and
buyer/assignee/transferee) regularly files returns and report income sufficient
to establish financial capacity," it added.
The order covers transactions involving
the payment of capital gains tax on both property and non-traded stocks,
donor's tax, estate tax, expanded withholding tax, and those covered by
tax-free arrangements under the law.
Outgoing BIR commissioner Kim Henares
has not replied to request for comment as of this post. Estela Sales, deputy
commissioner for legal affairs, declined to comment.
Disapproval
Benedict Tugonon, president of tax
industry group Tax Management Association of the Philippines (TMAP), said the
new order is "unjust and unfair" to taxpayers.
"Commissioner Henares should
refrain from issuing issuances now at this point in time, as a courtesy to the
new administration," Tugonon said in a phone interview.
"We will strongly recommend to the
next administration to include (this) among the issuances that should be
withdrawn or canceled," he added.
According to the order, application for
a certificate authorizing registration and tax clearance for property sale and
transfer may be evaluated for "possible" audit.
'Presumes taxpayers committed fraud'
If a buyer is found to not have the
financial capacity to acquire the said property, a letter of authority may be
issued by the concerned BIR revenue district office where the application was
filed.
A letter of authority is issued to
taxpayers being investigated or audited. While such issuance may not stop the
actual sale, Tugonon said it gives taxmen too much discretion.
"This presumes taxpayers committed
fraud. We all enjoy the legal presumption of good faith. Fraud cannot be
justified by mere speculation," he said.
"BIR examiners (are) given wide
latitude of discretion as to what constitute necessary documents to be
submitted to determine capacity to acquire," the TMAP official added.
Specifically, Tugonon said it will be
"inconvenient" for those without not required to file income tax
returns (ITR) to prove financial capacity.
Under the memorandum, an affidavit will
be required from the likes of minimum wage earners and even overseas Filipino
workers stating their annual income, source of income and why they are buying
the property.
"The (order) also covers estate
tax. How can the BIR investigate the financial capacity of the deceased when the owner is already dead?" Tugonon
said.
Henares, named as one of the most
influential tax practitioners by a magazine last year, is stepping out of the
BIR carrying controversial tax issuances that saw her drawing the ire of
taxpayers.
For instance, she tried, but failed, in
2013 to require taxpayers to report on their ITR earnings charged with final
taxes supposedly in a bid to better track tax evaders.
She also initially required doctors and
lawyers to disclose their rates and manner of billings as part of its run after
self-employed individuals said to be among the top tax non-compliant.
The Supreme Court invalidated the BIR
order in 2014.
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